Chapter 13 - Financial legislation
When requests are required: (b) ordinary annual services
Section 53 of the
Constitution provides that the Senate may not amend a bill which would
appropriate money for the ordinary annual services of the government.
A bill would appropriate money if it contains a provision expressly
stating that money is appropriated for the purposes of the bill. It is
therefore readily determined whether a bill is an appropriation bill. The
question which arises for interpretation is: what kind of appropriation is an
appropriation for the ordinary annual services of the government?
This expression is
used only in sections 53 and 54, and not in section 55. It is therefore not
justiciable and its interpretation is a matter for the two Houses in their
dealings with each other.
The framers of the Constitution had a fairly clear conception of the
meaning of the phrase “the ordinary annual services of the government”, and it
was expounded by a number of speakers at the Constitutional Conventions. The
expression referred to the annual appropriations which were necessary for the
continuing expenses of government, as distinct from major projects not part of
the continuing and settled operations of government. The expression had been
taken from the so-called Compact of 1857 between the government and the
Legislative Council of South Australia, and the operation of that agreement was
familiar to the framers of the Constitution. The interpretation of the
provision was also explored in a number of debates in the Senate. (For a
comprehensive history of the exposition of the phrase see ASP, 6th
ed., 1991, pp 569-80.)
The interpretation
of the expression was substantially settled in 1965 by what amounted to an
agreement between the Senate and the government, and by agreed applications of
the terms of that agreement since that time.
This agreement, which is generally referred to as the Compact of 1965,
arose from an attempt by the government to place in the non-amendable annual
appropriation bills provision for some matters which were traditionally
regarded as not forming part of the ordinary annual services. After debate in
the Senate and the consideration of the matter by an informal committee of
senators, a statement was made on behalf of the government indicating that appropriations for
the following matters would not be regarded as part of the ordinary annual
services of the government and would therefore be included in the amendable
bill:
(a) the
construction of public works and buildings;
(b) the
acquisition of sites and buildings;
(c) items of
plant and equipment which are clearly definable as capital expenditure;
(d) grants
to the States under section 96 of the Constitution; and
(e) new
policies not authorised by special legislation, subsequent appropriations for
such items to be included in the appropriation bill not subject to amendment by
the Senate.
This list reflected the principles set out in the report of the
informal committee of senators. (A detailed account of the establishment of the
Compact of 1965 is in ASP, 6th ed., 1991, pp 580-3.)
In 1974 two estimates committees drew attention to appropriations for
new policies included in the non-amendable appropriation bill, and the Standing Committee
on Constitutional and Legal Affairs was given a reference to consider the
inclusion of new policies not authorised by legislation in the non-amendable
bill. The committee’s report indicated that appropriations for new policies not
authorised by legislation should not be included in the non-amendable bill, and
recommended that the Senate reaffirm the principles of the Compact of 1965
(report of the committee, PP 130/1976). The Senate therefore passed the
following resolution:
That the Senate resolves:
(1) To reaffirm its
constitutional right to amend proposed laws appropriating revenue or moneys for
expenditure on all matters not involving the ordinary annual services of the
Government.
(2) That appropriations for
expenditure on:
(a) the
construction of public works and buildings;
(b) the
acquisition of sites and buildings;
(c) items of
plant and equipment which are clearly definable as capital expenditure;
(d) grants to
the States under section 96 of the Constitution; and
(e) new
policies not previously authorised by special legislation,
are not appropriations
for the ordinary annual services of the Government and that proposed laws for
the appropriation of revenue or moneys for expenditure on the said matters
shall be presented to the Senate in a separate Appropriation Bill subject to
amendment by the Senate. (17 February
1977 J.572)
The ordinary annual services are therefore defined by what they do not
include rather than what they include.
The application of the Compact of 1965 was the subject of
correspondence between the Standing Committee
on Appropriations and Staffing and the government, tabled in the Senate on 3 November 1988 and 4 April 1989. It was agreed
that expenditure on computers, which, due to changes in technology, are no
longer major items of capital equipment, and expenditure on the fitting out of
buildings, should be regarded as part of the ordinary annual services subject
to certain limits.
In 1999 the Senate
adopted a recommendation in the 30th report of the Appropriations
and Staffing Committee that some adjustments be made in the classification of
appropriation items for the purpose of determining whether they fall within the
category of ordinary annual services in the context of accrual budgeting
(22/4/1999, J.777). The adjustments provided that:
(i) items regarded as equity
injections and loans be regarded as not part of ordinary annual services
(ii) all appropriation items for
continuing activities for which appropriations have been made in the past be
regarded as part of ordinary annual services
(iii) all appropriations for existing
asset replacement be regarded as provision for depreciation and part of
ordinary annual services.
In 2004 the Senate determined a matter relating to the classification
of payments to international organisations, on the recommendation of the
Appropriations and Staffing Committee (41st report of the committee, PP
360/2004; 8/12/2004, J.273).
In March 2005 two appropriation bills were presented to replenish money
spent by departments and agencies on relief for the victims of the 2004
tsunami. One of the bills purported to be for the ordinary annual services, but
as the expenditure could not possibly be ordinary annual services expenditure,
both bills were treated as amendable bills (15/3/2005, J.499-500). The Northern
Territory Emergency Response package of bills repeated this anomaly (17/8/2007, J.4254), as did
bills to cover expenditure on an equine influenza outbreak (14/2/2008, J.152). See also
statement by the Chair of Committees in relation to the Appropriation (Regional
Telecommunications Services) Bill 2005-2006, SD, 14/9/2005, p. 37.
These instances indicated that the Department of Finance and
Administration appeared to be taking a position that ordinary annual services
include anything it regarded as falling within vaguely-expressed outcomes of
departments, including new policy proposals, a position quite contrary to the
compact of 1965 and subsequent Senate determinations (see Report No. 25 of
2005-06 of the Auditor-General, pp 40-41; Appropriations and Staffing
Committee, Annual Report 2005-06, PP 157/2006; Annual Report 2006-07, PP
138/2007; report of Finance and Public Administration Committee on annual
reports, PP 206/2007; report on additional estimates 2007-08, PP 230/2008;
Appropriations and Staffing Committee, 45th Report, PP 148/2008:
this report called for a return to the position formerly agreed between the
Senate and the government).
An amendment passed on 20 March 2008 to the motion for the second reading of the 2007-08
additional appropriation bills drew attention to the reports of the Senate
committees on this issue, and called upon the government to resolve it (J.322).
At the time of writing it remained unresolved. (See Supplement)
During the debate leading up to the Compact of 1965, it was pointed out
that appropriations for the two Houses of the Parliament should not be regarded
as ordinary annual services of the government, or, indeed, services of the
government, and it was recommended that they be contained in a separate bill.
This recommendation was not put into effect until 1982, when a separate
parliamentary appropriations bill was introduced as a result of the
recommendations of the Senate Select
Committee on Parliament’s Appropriations and Staffing (see under Parliamentary
appropriations, below).
For amendments of an annual appropriation bill not for the ordinary
annual services, see 30/11/1995, J.4320-1; 24/6/2004, J.3697-8.
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