Bills Digest no. 97 2008–09
Appropriation (Nation Building and Jobs) Bill (No. 2) 2008–09
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Date introduced: 4 February 2009
House: Hose of Representatives
Portfolio: Finance and Deregulation
Commencement: On Royal Assent
Links: The relevant links to the Bill, Explanatory Memorandum
and second reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills have been passed they can
be found at ComLaw, which is at http://www.comlaw.gov.au/.
To
appropriate $1 727.2 million for the non-ordinary (‘other’) annual services of
the government as part of the Nation Building and Jobs Plan.
On 3 February 2009, the Rudd Government announced the
National Building and Jobs Plan (the Plan).[1] The context is the deteriorating Australian and world economies. The Plan’s
purpose is to provide additional fiscal stimulus to counter the contraction in
the economy. The Plan is the fourth fiscal stimulus package and follows the
Economic Security Strategy,[2] the Nation Building Package,[3] and the Council of Australian Governments (COAG) funding package.[4]
For a discussion of the desirability and the efficacy of
measures to revive the economy through fiscal stimulus, see the Bills Digest
for the Appropriation
(Nation Building and Jobs) Bill (No. 1) 2008-2009.
The Plan has ten elements:
- Building the Education Revolution
- 20 000 social and defence homes
- energy efficient homes
- small business and general business tax breaks
- black spots, boom gates and community infrastructure
- tax bonus payment for working Australians
- single-income family bonus payment
- farmer’s hardship bonus payment
- back to school bonus payment, and
- training and learning bonus payment.
To implement the Plan, the government introduced six Bills:
- the Appropriation (Nation Building and Jobs) Bill (No. 1)
2008-2009
- Appropriation (Nation Building and Jobs) Bill (No. 2) 2008-2009
- Household Stimulus Package Bill 2009
- Tax Bonus for Working Australians Bill 2009
- Tax Bonus for Working Australians (Consequential Amendments) Bill
2009, and
- Commonwealth Inscribed Stock Amendment Bill 2009.
This Bills Digest deals with the Appropriation (Nation
Building and Jobs) Bill (No. 2) 2008-2009 (the bill).
All
six Bills were referred to the Finance and Public Administration Committee for
inquiry and report by 10 February 2009. Details of the inquiry are at http://www.aph.gov.au/Senate/committee/fapa_ctte/stimulus_package/index.htm.
The Plan’s cost is estimated at almost $42 billion over four
years. Of this, almost $13 billion is in 2008–09, more than $17 billion in
2009–10, more than $1.5 billion in 2010–11, and more than $1.5 billion in
2011–12.[5]
The Bill appropriates $1 727.2 million comprising:
- $987.2 million in 2008–09 for the Department of Education,
Employment and Workplace Relations under the Building the Education Revolution
program
- $260 million for the Department of Families, Housing, Community
Services and Indigenous Affairs for social housing, and
- $480 million to the Department of Infrastructure, Transport,
Regional Development and Local Government. The components are:
- $230 million of which $150 million is for repairs to national
highways, $50 million for boom gates for rail crossings, and an additional $30
million for the Black Spot program, and
- an additional $250 million under the Regional and Local Community
Infrastructure Program: Strategic Projects program.
All of the above amounts will
be paid to the states, territories and local governments as specific purpose
payments.
This Bill appropriates funding of $987.2 million in the 2008–09
financial year as part of the government’s $14.7 billion Building the Education
Revolution (BER) initiative. Subsequent funding of $8.5 billion for school
infrastructure is proposed in 2009–10, and a further $5.26 billion is proposed
in 2010–11.[6] The $987.2 million will be additional to the Commonwealth’s expenditure on
schools which was estimated in the Mid-Year Economic and Fiscal Outlook (MYEFO)
to be $9.8 billion in 2008–09.[7]
Building the Education Revolution has three key programs:
- Primary Schools for the 21st Century
- provides $12.4 billion over three years for government and
non-government primary schools to build or upgrade major infrastructure, such
as multi-purpose halls and libraries
- facilities must be made available to the community for low or no
cost
- projects must be completed by 30 June 2011
- priorities will be given to schools applying to build new
facilities, but schools with a recently completed library or hall are still
entitled to apply and
- funding caps apply and will be determined by school size. Schools
with up to 50 students, for example, can apply for up to $250 000; schools with
over 400 students can apply for up to $3 million in funding.[8]
- Science and Language Centres for 21st Century
Secondary Schools
- provides $1 billion over three years to build approximately 500
new science laboratories or language learning centres in government and
non-government secondary schools and
- funding will be through a one-off competitive grants process and
only made available to schools with a demonstrated need and the capacity to
complete construction by 30 June 2010.[9]
- National School Pride Program
- provides a total of $1.3 billion for all Australian schools to
undertake maintenance and minor building work and
- funding caps apply and will be determined by school size. Schools
with over 400 students will be able to apply for a maximum of $200 000.[10]
The Government proposes to make funding for the BER
available from February 2009 through state and territory governments for
government schools and through Block Grant Authorities (BGAs) for
non-government schools. It will be a condition of funding, however, that the
state and territory governments and BGAs prioritise projects so they can be
completed on time. Schools receiving funding under any of the three new
programs will be required to report on the progress of projects using an online
reporting portal.[11]
The National School Pride Program proposes funding of
$1.3 billion over three years. The program is similar to the Investing
in Our Schools Programme (IOSP) that operated under the Coalition
Government between 2005 and 2008 in that it will fund maintenance and minor capital
works with a cap of $200 000.[12] However, unlike IOSP, the Government expects that all schools will receive
funding (with 60 per cent of schools receiving funding in 2009 and 40 per cent
in 2009–10. Proposal assessments will be through the states for government
schools and funding caps are tied to school size.[13] Proposal assessments for non-government schools will be managed through BGAs as
they were under the IOSP.
The Primary Schools for the 21st Century program
is the largest component of the Building the Education Revolution package.
Funding will be $12.4 billion over three years with the majority appropriated
in the 2009–10 and 2010–11 financial years. All primary schools, special
schools and K–12 schools with a primary component are expected to benefit from
this program.[14] They will be eligible to apply for funding to build libraries, multipurpose
halls or to upgrade existing facilities. Under the terms of the Council of
Australian Governments’ National Partnership Agreement on the Nation Building
and Jobs Plan, funding for government primary schools is conditional on the
states agreeing to make new and refurbished buildings in primary schools
available for community use at no or low cost. Presumably similar conditions
will be included in agreements with non-government schools authorities.[15]
Of the $987.2 million appropriated by the Bill, $386.4
million will be spent on the National School Pride Program and
$600.8 million on the Primary Schools for the 21st Century program.[16]
Sector allocation estimates for 2008–09 are: government
schools $688.5 million, Catholic schools $192.6 million and independent schools
$106.2 million. State allocation estimates for 2008–09 are: New South Wales $317.1
million, Victoria $235.0 million, Queensland $183.9 million, Western Australia
$107.9 million, South Australia $85.1 million, Tasmania $27.2 million, Northern
Territory $14.6 million and the Australian Capital Territory $16.3 million.[17]
The primary objective of the BER is ‘to provide economic
stimulus through the rapid construction and refurbishment of school
infrastructure’.[18] However, the substantial financial commitment of $14.7 billion to schools is
consistent with the Labor Government’s emphasis on investing in education to
build future national prosperity. The Labor Party in opposition and in
government have named this commitment the ‘Education Revolution’.[19]
To date, the Government’s budget measures for schools have
been directed at broadly based programs developed in partnership with the
states and territories. These new programs include the Digital Education
Revolution (computers in schools initiative), the National Action Plan for
Literacy and Numeracy (providing additional support to students and schools
with most need), Trade Training Centres in Schools, increasing general
recurrent grants for government primary schools to the same level as government
secondary schools and new indexation arrangements for all government schools
which will increase their recurrent grant funding.
The concentration of funding, $12.4 billion of the total
$14.7 billion, to primary schools builds on the government’s commitment to
increase general recurrent funding of government primary schools. Recent
reports have drawn attention to the under-resourcing of government and non-government
primary schools. Two concluded that many primary schools, particularly those
serving disadvantaged communities, did not have sufficient resources to meet
the National
Goals for Schooling.[20] Similarly, an investigation into the state of Australian primary schooling,
based mainly on evidence provided by staff from a random sample of 160 primary
schools, concluded:
There is a link between the capacity of schools to develop
good programs and the quality and scale of their facilities. It is much harder
for a school to promote all of the Key Learning Areas if it consists of little
more than regular classrooms, a set of offices for the principal and clerical
staff and a reception area. … Primary schools tend to be too small to acquire
the funds (or, in the case of non-government schools, have sufficient income to
service debts) needed for capital works. Being small also works against their
political interests, as they are more likely to be invisible to capital grants
administrators. Sadly, capital works have been done on the cheap. Old and
sub-standard structures place a huge pressure on primary schools. This has
become increasingly challenging as safety requirements have become more rigorous.
Limited funds must be diverted to urgent works, such as replacing asbestos
materials or removing trees that have died as a result of the drought. Many of
these requirements are very expensive.[21]
Understandably, therefore, the Australian Primary Principals
Association has welcomed the BER package and is calling for the Bill to be
passed.[22]
Before the BER package was announced, the Government’s
commitment to school capital works was similar to the previous government—$1.7
billion over four years.[23] Estimates for 2008–09 were $526.9 million or 5.5 per cent of the Commonwealth’s
total school funding.[24] The Mid Year Economic and Fiscal Outlook (MYEFO) showed a decrease in the
estimate for school capital works to $341.44 million to take into account changed
parameters in the costing of capital works.[25] The additional funding of $987.2 million appropriated in the Bill therefore represents
a significant increase in the Commonwealth’s funding to school infrastructure.
The $14.7 billion over three
years in the BER package, albeit a one-off measure, represents a major shift in
the Commonwealth’s role and has generated discussion on the possibility of cost
shifting from the states to the Commonwealth. The Government has argued that
this will be prevented by making the funding conditional on the states maintaining
‘their current and planned level of investment for capital infrastructure in
schools over the next four years, spending it concurrently with BER funding on
school infrastructure, and providing the Australian Government with evidence of
capital expenditure for the past four years and estimates for the next four
years’.[26]
As a part of the $42 billion economic stimulus package, up
to $6 billion is to be provided under the Commonwealth Social Housing
Initiative to fund the construction of around 20 000 public and community
housing dwellings. It is envisaged that the new houses should be largely
completed by December 2010.[27] The Commonwealth Social Housing Initiative will also allocate around $400 million
to the states and territories over two years for the repair of around 2 500
public housing dwellings that are currently uninhabitable.[28]
Until recently, the main
vehicle through which the Australian Government, along with the state and
territory governments, has provided funding for public housing was the
Commonwealth-State Housing Agreement (CSHA). This joint agreement helped to
provide public and community housing to individuals and families in need since
the late 1940s. The last CSHA commenced in 2003 and was effective until 30 June
2008.
In recent years it has
been Australian Government policy to place a greater emphasis on Commonwealth
Rent Assistance (CRA)—a payment to
support eligible renters in the private rental market—than on the CSHA. As a result, Australian
Government outlays on the CSHA declined in nominal and real terms since 1991–92, while CRA funding was increased. For example,
in 1994–95, government expenditure for the CSHA was four per cent higher than
for CRA. Between 1994–95 and 2003–04, an increase of nine per cent in CRA expenditure combined with a 31 per cent decrease for CSHA resulted in CRA expenditure
surpassing CSHA expenditure.[30] In 2006–07, the Howard Government
provided $2.2 billion in CRA funding, as opposed to $970.6 million in CSHA
funding.
In terms of public
housing, this shift in funding emphasis has meant that public housing stock has
decreased as state and territory public housing authorities have been squeezed
for funds. Through the CSHA, in 1996–97 the stock of public housing was around
375 000 dwellings, which was then about five per cent of Australia’s total
housing stock. In subsequent years, however, there was little or no growth in
public housing stock and, as at 30 June 2008, the total number of public rental
dwellings managed by state and territory housing authorities had fallen to 337
866.[31]
A reduction in the amount of public housing stock has resulted
in a reduced capacity on the part of governments to provide affordable housing
to those most in need. Waiting lists for public housing are increasing. As at
30 June 2008, 177 652 households were on waiting lists for public rental
housing. Of these households, 14 638 were classified as being in ‘greatest
need’. This number represented eight per cent of all households on waiting
lists.[32]
Increasingly, the public housing that is available is being
used for emergency housing needs – to assist those estimated 100 000
Australians who are homeless on any given night and those individuals and
households that are at risk of becoming homeless. In effect, public housing is
becoming welfare housing.
At the same time, rents in the private market are increasing
apace. Rents increased by an average of 12 per cent during 2006–07 and a major
report has predicted rent rises of 50 per cent in major cities over the next
four years.[33] Because there has been an upward shift in the distribution of private rental
stock towards higher-rent properties, higher-income households have displaced
lower-income households from more affordable housing in the private rental
market.[34] While these lower-income households may receive Commonwealth Rent Assistance,
this assistance is capped and, once the maximum rate (which is indexed twice
each year to reflect changes in the consumer price index) is reached, any rent
increases are borne by CRA recipients. It should also be noted that CRA is paid at a universal rate across the country. This renders it a ‘blunt instrument’, and one
that cannot take into account variations in rental prices across jurisdictions.
As a part of the 2008–09 Budget, the Government signalled
that it would be reforming the framework for federal financial arrangements.
This involved a rationalisation of existing Commonwealth housing and
homelessness assistance programs under the new National Affordable Housing
Agreement, which was introduced from 1 January 2009. This Agreement is to provide funding of $6.2 billion over five years
from 2008-09.
Under the National Affordable Housing Agreement, the states
and territories are to pursue reforms in three areas of National Partnership,
one of which is social housing. Under the social housing national partnership,
$400 million is to be provided over the next two financial years for capital
investment for social housing and homelessness, with approximately 1 600 to 2
100 additional dwellings to be built by 2009-10. While this investment will,
along with the National Rental Affordability Scheme and A Place to Call Home
strategy, improve housing affordability in Australia to a degree, it will not
add substantially to the public housing supply.[35] And without a significant increase in Australia’s public housing sector, some
commentators argue that the nation will fail to meet future demand for secure,
low-cost housing.[36]
Greens Senator Scott Ludlam recently proposed that the
Government invest an initial $2 billion in public and not-for-profit
housing to enable the construction of more than 6 000 homes for low-income
families. Ludlum went on to argue that ‘the Government needs to pump sufficient
funds into public housing, to bring down waiting lists and provide relief to
these families’.[37]
Comment on the Commonwealth Social Housing Initiative has
been almost universally positive, with community groups, the housing industry
and state governments all expressing their support for the package.
While community groups have noted that there is still more
work to be done in improving housing affordability in Australia, and thereby
assisting the most disadvantaged in the community, they hailed the package as a
significant contribution towards the realisation of these goals.
Michael Perusco, Chief Executive of the Sacred Heart
Mission, has commended the government for its actions in assisting the
disadvantaged through the public housing stimulus package. He has argued that
the package has ‘returned public housing to its rightful places as a key part
of social policy, sending the powerful message to policymakers, advocates and
the community that public housing must be a priority’.[38]
Executive director of Catholic Social Services, Frank
Quinlan, stated that he was ‘delighted’ with the package, and urged state
governments to ‘get behind it quickly’.[39]
Julian Disney, chairman of the National Affordable Housing
Summit, has noted that the initiative represents the biggest expenditure on
public housing ‘for at least a quarter of a century’, and a ‘quantum leap in
commitment to resources badly needed and much overdue for many years’.[40]
NSW Master Builders Association’s executive director Brian
Seidler welcomed the package, and is reported as having stated that anything
that gives the building industry a kick along is good news.[41] Managing director of the Housing Industry Association, Ron Silberberg is
supportive of the package on the grounds that it will provide a ‘much needed
boost’ for construction work, with the 20 000 new dwellings creating as many as
35 000 new jobs in the building and related industries.[42]
The states, too, have welcomed the package.[43] West Australian Treasurer Troy Buswell has noted that it complements a $316
million Western Australian stimulus package to build 1 000 new homes for
low-income families and government workers.[44] NSW Housing Minister David Borger and Victorian State Housing Minister Richard
Wynne have both expressed their strong support for the package, indicating that
the investment would help create around 9 000 and 5 000 homes, respectively.[45]
Various concerns have been raised in relation to the Commonwealth
Social Housing Initiative. For one thing, initially it was not clear precisely
on what basis funding for the initiative was to be distributed to the states.
This led NSW Housing Minister David Borger to observe that ‘if the funding is
distributed to the states on a per capita basis then NSW would be entitled to
receive approximately one third of the $6.4 billion’.[46] Victorian Council of Social Service policy spokesman David Imber is reported as
having stated that Victoria should benefit from at least a quarter of the
spending, but gave no indication as to how this figure was arrived at.[47] The West Australian Government is reported as viewing the package as good news
for Western Australia, so long as the money is shared between the states on a
per-capita basis.
According to the recently-released Council of Australian
Governments National Partnership Agreement on the Nation Building and Jobs
Plan, funding is to be allocated to the states ‘generally on a per capita
basis, subject to jurisdictions submitting suitable proposals that meet the
requirements of the initiative’.[48]
The success or otherwise of the package—should the Bill be
passed—is very much dependent upon the cooperation of the states, and on their
capacity to deliver on the package. Some commentators have argued that the
states have a poor record in delivering on infrastructure development
commitments, and are ill-equipped to promptly execute such commitments.[49] However, it should be noted that the appointment of national coordinators at
Commonwealth and state levels to maximise the timely and effective delivery of
the package should go some way towards addressing such concerns. The fact that
the Australian Government drew on data from the states—including data on the
number of housing projects that were already in their development pipelines—in
developing the package, further enhances the likelihood of its success.[50] That said, it is to be expected that some states will be in a better position
to commence construction projects than others.
Much will depend on the capacity of the building and
construction industry to cater to the substantial boost in building activity
entailed by the economic stimulus package as a whole.
Another issue has to do with maintenance of the
newly-constructed public housing stock. If the new housing is to be adequately
maintained so as to not fall into disrepair, then this will demand that
sufficient funding be allocated under the National Affordable Housing Agreement
in the future. The National Partnership Agreement on the Nation Building and
Jobs Plan includes a provision for improved maintenance benchmarks for social
housing, but in the absence of sufficient funding for these benchmarks to be
met, there is a risk that the quality of the new public housing stock may
decrease.
It is generally agreed that supply-side responses to the
current housing affordability crisis are essential, the reason being that
focusing primarily on providing Commonwealth Rent Assistance to supplement
private rental merely stimulates demand and increases housing rental costs. It
has done nothing to increase the supply of affordable, public housing.
Should the Appropriation (Nation Building and Jobs) Bill
(No. 2) 2008-2009 be passed, and the Commonwealth Social Housing Initiative implemented,
this would help to reduce public housing waiting lists and assist in reducing
the number of homeless Australians.
Appropriation (Nation Building and Jobs) Bill (No. 2)
2008-2009 appropriates $230 million for land transport. Of this, $150 million
is for repairs to national highways, $50 million is for boom gates for rail
crossings, and an additional $30 million is for the Black Spot program.
The government will provide $150 million in 2008–09 to
repair regional links on national highways. According to the government, in
addition to preventing the deterioration of national highways, this will create
jobs in regional areas including those where jobs are being lost due to the
contraction in the mining sector.[51]
The Commonwealth provides $300 million annually to the
states for maintenance of national highways. Funding is allocated among the states
using a formula. The formula combines each jurisdiction’s proportion of the
national total of lane length, total vehicle distance travelled, and total
heavy vehicle distance travelled to determine the amount of funding each jurisdiction
will receive.[52] The states determine how the funds will be spent.
The government proposes to provide $150 million over two
years—$50 million in 2008–09 and $100 million in 2009–10—to improve road and
rail safety by funding the construction of boom gates at rail crossings. According
to the government, there are around 9400 rail crossings the great majority of
which do not have active protection. Projects will be prioritised using the Level Crossing
Assessment Model, a safety risk assessment tool used across Australia.[53] The allocation of funds for this purpose is presumably in response to several
highly-publicised crashes at rail crossings which have entailed a considerable
cost in lives and damage.
The government will provide additional funding of $90
million over two years—$30 million in 2008–09 and $60 million in 2009–10—for
the road safety Black Spot
Program. The program aims to reduce the social and economic costs of road
accidents through the identification and cost effective treatment of dangerous
locations on Australian roads. This measure is in addition to the $60 million
increase in funding in 2008-09 for this program announced as part of the
Government's Nation Building Package on 12 December 2008.[54]
There have been several benefit-cost assessments of the
Black Spot program. The studies indicate that the program has had very high benefit-cost
ratios. For example, the Bureau of Transport Economics, found:
Overall, the Black Spot Program appears to have been highly
effective in reducing the number of casualty crashes. It is estimated that the
Program prevented around 32 fatal crashes and 1 539 serious crashes between
1996–97 and 1998–99. The Program is therefore estimated to have saved at least
32 lives and prevented a large number of injuries over these three years. Further
benefits will continue to accrue over the life of the black spot treatments
that were applied.[55]
The overall benefit-cost ratio was 16.2. This means that the
value of the benefits was 16.2 times the cost.
The government will provide an
additional $500 million over two years—$250 million in each of 2008–09 and
2009–10—to support strategic projects being undertaken by local governments
including the construction of community infrastructure such as town halls,
community centres and sport and recreation facilities. According to the
government, this measure will allow a greater number of projects to be funded
from the current applications for the Local Community Infrastructure Program.
This measure is in addition to the $300 million in 2008–09 for the Regional
and Local Community Infrastructure Program announced at the Inaugural
meeting Australian Council of Local Governments on the 18 November 2008.[56]
For the most part, the Bill’s
provisions are identical to those in Appropriation Bill (No. 2) 2008-09. The main
difference is that the Bill omits provisions in Appropriation Bill (No. 2)
2008-09 dealing with the Advance to the Finance Minister.
Clause 3 contains definitions. Most definitions are identical to
those in Appropriation Act (No. 2) 2008-09. The following are some of
the definitions in clause 3:
Clause 6 provides that the total of the items in Schedule 2 is $1 727 200 000.
Clause 7 deals with payments to the states, territories and local
governments. Subclause 7(2) specifies that if the Portfolio
Budget Statements, Portfolio Supplementary Estimates Statements, Portfolio
Additional Estimates Statements or Portfolio Supplementary Additional Estimates
Statements indicate that certain activities are
intended to be for a particular outcome, then expenditure on those activities
is taken to be as contributing to the outcome.
Clause 8 deals with ‘administered items’. Subclause 8(1) provides that the amount identified for an administered item in an outcome can
be used to contribute to that outcome. The wording of subclause 8(2) is
identical to that in subclause 7(2).
Clause 9 deals with administered assets and liabilities. Subclause 9(1) provides that the amount identified for an agency’s
administered assets and liabilities may be applied to achieving any of the
agency’s outcomes, which are specified in paragraphs 9(1)(a) to 9(1)(h). Subclause 9(2) specifies that if the Portfolio Budget Statements,
Portfolio Supplementary Estimates Statements, Portfolio Additional Estimates
Statements or Portfolio Supplementary Additional Estimates Statements indicate that certain activities were intended to be for a
particular outcome, then expenditure on those activities is taken to be as
contributing to the outcome.
Clause 10—Other departmental items—provides that the amount
specified in an other departmental item for an Agency may be applied for the
departmental expenditure of the Agency.
Clause 11 deals with CAC Act body payments. Subclause 11(1) provides that an amount, appropriated for a CAC Act body payment item, may be
paid to the body for that body’s purposes. Subclause 11(2) provides that
if an Act provides that a CAC Act body must be paid amounts that are
appropriated by the Parliament for the purposes of the body, and Schedule 2 contains a CAC Act body payment item for that body, then the body must be paid
the full amount specified in the item. According to the Explanatory Memorandum:
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 legislation requires the Commonwealth to
pay the full amount appropriated for the purpose of the body.[57]
Three clauses in Part 3 deal with reductions to appropriations:
- clause 12 deals with reductions of (a) payments to the
states, territories and local governments and (b) administered items
- clause 13 deals with reductions of (a) administered assets
and liabilities and (b) other departmental items, and
- clause 14 deals with reductions to CAC Act bodies payment
items.
Subclause 12(1) stipulates that the amount by which payments to the
states, territories and local governments and for administered items can be
reduced is the difference between what has been appropriated and what has been
spent, the latter being the amount shown in agencies’ financial statements.
However, paragraph 12(2)(a) gives the Finance Minister power to
determine that subclause 12(1) does not apply or that subclause 12(1) applies as if the amount in the annual report were the amount that the Finance
Minister determines paragraph 12(2)(b). The Explanatory
Memorandum states:
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.[58]
Subclause 12(3) provides
that a determination made under subclause 12(2) is a legislative
instrument, that section 42 (relating to disallowance) of the Legislative
Instruments Act 2003[59] applies to the determination, but that Part 6 (relating to sunsetting
provisions) of the Legislative Instruments Act 2003 does not apply to
the determination. In short, this means that the Finance Minister’s
determinations are disallowable by Parliament, but once made, will not expire.
Subclause 13(1) enables the minister responsible for an agency, or—where
the Finance Minister is responsible for the agency—the chief executive of the
agency, to seek a reduction in administered assets and liabilities, and other
departmental items, while subclause 13(2) empowers the Finance Minister
to make a determination that accords with the request. However, the
determination cannot reduce the appropriation below zero (subclause 13(3)).
Requests are not legislative instruments (subclause 13(5)). While the
Finance Minister’s determinations are legislative instruments and are
disallowable, the determinations—like those in subclause 12(3)—are not
subject to the sunsetting provisions of the Legislative Instruments Act 2003 (subclause 13(6)).
The wording in clause 14—which
deals with reductions to CAC Act bodies payment items— is almost the same as
for clause 13. However, whereas a request can come from the Chief
Executive of an agency for which the Finance Minister is responsible in the
case of clause 13, a similar request must come from the Secretary of the
Department in the case of CAC Act bodies (paragraph 14(1)(b)). Subclause
14(5) confirms that a reduction can be made for a CAC Act body even though
it has been allocated funds under subclause 11(2).
Clause 15—Crediting amounts to Special Accounts provides
that if a purpose of a special account is a purpose that an item
covers—irrespective of whether that item expressly refers to the special
account—then amounts may be debited against the appropriation for that item and
credited to the special account.
Clause 16 deals with the conditions attached to
grants of financial assistance to the states, territories and local governments.
Section 96 of the Constitution provides in part:
… the Parliament may grant financial assistance to any State
on such terms and conditions as the Parliament thinks fit.
According to the Explanatory Memorandum, clause 16:
… deals with Parliament’s power under section 96 of the Australian Constitution to provide financial assistance to the States. Clause 16
delegates the power to the responsible Ministers listed in Schedule 1 of
the Bill, by providing the Ministers named in Schedule 1 with the power to
determine:
- conditions under which payments to the States, the
ACT and NT and local councils may be made: paragraph 16(2)(a); and
- the amounts and timing of those payments: paragraph
16(2)(b).[60]
Subclause 16(1) provides that it applies to
payments to the states, territories and local government for the outcomes
listed in column 2 of Schedule 1. Paragraph 16(2)(a) provides that payments must accord with the conditions attached to the
payments—as established by the process set out in subclause 16(3)—and
also with any determination as to the amounts and timing of payments paragraph 16(2)(b). Subclause 16(3) provides that the way terms and conditions are
established is for the relevant Minister to make a determination in
writing before or after the Act commences. Subclause 16(4) provides that
determinations mentioned in paragraph 16(2)(a) and determinations
made under paragraph 16(2)(b) are not legislative instruments. The
Explanatory Memorandum explains that the reason is:
… because the 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.[61]
Schedule 1 lists the agencies responsible for making payments to the
states, territories, and local governments, the outcomes for which payments are
made, and the names of the Ministers responsible for determining conditions and
for determining payments.
Schedule 2 lists the services for which money is appropriated. The
appropriations are broken down by agency, and by the form that the payments
take. In this case, all payments are to the States, ACT, NT and local
government.
Members, Senators and
Parliamentary staff can obtain further information from the Parliamentary
Library on (02) 6277 2464.
Richard Webb
10 February 2009
Bills Digest Service
Parliamentary Library
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