Introductory Info
Date introduced: 6 October 2020
House: Houser of Representatives
Portfolio: Finance
Commencement: The Bills commence on Royal Assent.
Purpose of
the Bills
This Bills Digest refers to three Bills (jointly referred
to as the Appropriation Bills).
The purpose of the Appropriation
Bill (No. 1) 2020–2021 (the No. 1 Bill) is to propose appropriations from
the Consolidated Revenue Fund (CRF) of $36,809,121,000 ($36.8 billion). This is
equivalent to 5/12ths of the estimated 2020–21 annual appropriations for the
ordinary annual services of Government. The balance of the appropriations for
the ordinary annual services of the Government for the 2020–21 financial year
($76.4 billion) was contained in the Supply Act (No. 1)
2020–2021 (the No. 1 Supply Act) which received Royal Assent on 24
March 2020.[1]
Of the appropriations proposed in the No. 1 Bill:
- $18,875,822,000
($18.9 billion) is for the departmental activities of government entities and
- $17,933,299,000
($17.9 billion) is for activities that government entities administer on behalf
of the Commonwealth Government.
The purpose of the Appropriation
Bill (No. 2) 2020–2021 (the No. 2 Bill) is to propose appropriations in the
amount of $14,854,576,000 ($14.9 billion) from the CRF. This is equivalent
to 5/12ths of the 2020–21 annual appropriations that are not for the ordinary
annual services of the Government. The balance of the appropriations for the
other services of Government for the 2020–21 financial year was contained in
the Supply Act
(No. 2) 2020–2021 (the No. 2 Supply Act) which received Royal
Assent on 24 March 2020.[2]
Of the appropriations proposed in the No. 2 Bill:
- $1,318,257,000
($1.3 billion) is for payments to states, ACT and NT and local governments and
- $13,536,319,000
($13.5 billion) is for non-operating activities.
The purpose of Appropriation
(Parliamentary Departments) Bill (No. 1) 2020–2021 (Parliamentary Departments
Bill) is to propose appropriations in the amount of $141,746,000 ($141.7 million)
from the CRF for expenditure related to parliamentary departments. This is
equivalent to 5/12ths of the estimated 2020–21 annual appropriations for
expenditure in relation to the parliamentary departments. The balance of the
annual appropriations for the parliamentary departments for 2020–21 was
contained in the Supply
(Parliamentary Departments) Act (No. 1) 2020–2021 (the Parliamentary
Departments Supply Act).[3]
Of the appropriations proposed in the Parliamentary
Departments Bill:
- $116,886,000
($116.9 million) is for the activities of parliamentary departments
- $3,810,000
($3.8 million) is for the administrative functions of parliamentary departments
and
- $21,050,000
($21 million) is for the non-operating expenses of the Department of
Parliamentary Services.
Structure of
the Bills
Part 1 of each Bill deals with preliminary matters,
including when the Acts commence, and how to interpret the Acts.
Part 2 of each Bill outlines the quantum and types of
appropriation from the CRF.
Part 3 of the No. 1 and No. 2 Bill establish the Advance
to the Finance Minister (AFM) for 2020–2021, whereas Part 3 of the
Parliamentary Departments Bill establishes the Advance to the responsible
Presiding Officer for 2020–2021.
Part 4 of each Bill deals with technical matters including
crediting amounts to special accounts, the formal appropriation of moneys from
the CRF, and the subsequent automatic repeal of the Acts.
Schedule 1 of the No. 2 Bill nominates the Ministers who
are able to impose conditions on grants of financial assistance to the states
and territories proposed in that Bill.
Schedule 1 of the No. 1 Bill and the Parliamentary
Departments Bill and Schedule 2 of the No. 2 Bill contain the details of the
amounts and types of appropriation to be made to each entity.
Background
About appropriations
An appropriation is the legal release of monies from the
CRF.[4]
Appropriation Acts, however, do not create a source of power for the
Commonwealth to spend money; they merely release that money from the CRF. The
Commonwealth’s power to spend money must be found in other parts of the Australian
Constitution.[5]
Under the terms of the Constitution, there are
certain unique requirements that a Bill proposing to appropriate monies from
the CRF must satisfy.
Constitutional requirements
Section 81 of the Constitution provides:
All revenues or moneys raised or received by the Executive
Government of the Commonwealth shall form one Consolidated Revenue Fund, to be
appropriated for the purposes of the Commonwealth ...[6]
Section 83 of the Constitution provides that no
money may be withdrawn from the CRF ‘except under appropriation made by law’.
The effect of these two sections is that all moneys received by the
Commonwealth must be paid into the CRF, and must not be spent before there is
an appropriation authorising specific expenditure.
Powers of the House of
Representative to appropriate
Section 53 of the Constitution provides that laws
appropriating money may not originate in the Senate.[7]
Further, under section 56 of the Constitution, all proposed laws for the
appropriation of money may only be passed following a recommendation by the
Governor-General. By convention the Governor-General acts only upon the advice
of the Executive, so in practice section 56 prevents non-government
members of the House of Representatives introducing Bills that would propose to
appropriate money from the CRF.[8]
Powers of the Senate to amend
The Senate may not amend proposed laws appropriating
revenue or moneys for the ordinary annual services of the Government. The Senate
may, however, return to the House of Representatives any such proposed laws
requesting, by message, the omission or amendment of any items or provisions.[9]
The Senate may amend proposed laws appropriating revenue
for purposes other than for the ordinary annual services of the Government, as
long as it does not ‘increase any proposed charge or burden on the people’.[10]
Conceivably, the Senate could amend an appropriation Bill for the other
services of Government to, for example, redirect the proposed appropriation to
another purpose, or reduce the proposed appropriation to nil. The Senate may
also request that, if new measures are included in a Bill for the ‘ordinary
annual services of Government’, the Bill be returned to the House with a
message requesting those new measures be omitted from the Bill.
The ‘ordinary annual services
of government’ versus the ‘other’ services of government
Section 54 of the Constitution requires that there
be a separate law appropriating funds for the ‘ordinary annual services of
government’, and that other matters must not be dealt with in the same Bill.
However, what constitutes the ‘ordinary annual services of the Government’ and
‘other’ services of the Government is not defined in the Constitution.
A working distinction between ordinary and other annual
services was agreed in a ‘Compact’ between the Senate and the Government in
1965.[11]
Several amendments have been made to the Compact since 1965, and in 2010 the
Senate Standing Committee on Appropriations and Staffing recommended the Senate
restate the Compact in a consolidated form.[12]
On 22 June 2010, the Senate resolved as follows:
(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 (but
not including the acquisition of computers or the fitting out of buildings);
(d) grants to the states under section 96 of
the Constitution;
(e) new policies not previously authorised by
special legislation;
(f) items regarded as equity injections and
loans; and
(g) existing asset replacement (which is to be
regarded as depreciation),
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.
(3) That, in respect of payments to international
organisations:
(a) the
initial payment in effect represents a new policy decision and therefore should
be in Appropriation Bill
(No. 2); and
(b) subsequent
payments represent a continuing government activity of supporting the international
organisation and therefore represent an ordinary annual service and should be
in Appropriation Bill (No. 1).
(4) That
all appropriation items for continuing activities for which appropriations have
been made in the past be regarded as part of ordinary annual services.[13]
Adherence to the Compact has not always been strict, and
the High Court has held that any disagreements between the Houses are not
justiciable.[14]
Any disputes are to be determined between the Houses themselves.
Departmental and administered
expenses
Australian Accounting Standard 1050 Administered Items
requires that government agencies distinguish between revenues and expenses
that they administer for the Government, and those over which they have some
control.[15]
Generally, administered expenses are the costs of programs that agencies run
for the Government, while departmental expenses are the costs incurred in
running agencies.
Appropriation Bills, therefore, distinguish between
‘administered’ expenses and ‘departmental’ expenses. An administered
appropriation may be used only for the program or outcome that it is
appropriated for, while a departmental appropriation may be moved between
different departmental activities.[16]
Outcomes and programs
While the level of detail necessary for an Appropriation
Act to be valid is generally low,[17]
in the Pharmaceutical Benefits case the High Court held:
... there cannot be appropriations in blank, appropriations for
no designated purpose, merely authorising expenditure ...[18]
The Appropriation Bills must, therefore, also describe—in
general terms—what the moneys are to be utilised for. The Bills use four
methods for describing the purposes of the proposed appropriations.
Appropriations for ‘outcomes’ of
non-corporate Commonwealth entities
For non-corporate Commonwealth entities, the purposes of
operating appropriations (both departmental and administered) are specified
with reference to the ‘outcomes’ of those entities. In 2019, the Department of
Finance explained ‘outcome statements’ in the following terms:
Outcome statements articulate Government objectives and serve
three main purposes within the financial framework:
1. to
explain the purposes for which annual appropriations are approved by the
Parliament for use by entities
2. to provide a basis for budgeting and reporting against
the use of appropriated funds
3. to
measure and assess entity and program non-financial performance in contributing
to Government policy objectives.[19]
Appropriations for corporate
Commonwealth entities
As corporate Commonwealth entities are legally distinct
from the Commonwealth itself, money cannot be appropriated directly to those
entities.[20]
Instead, amounts are appropriated to relevant Departments for on-payment to
corporate Commonwealth entities within Departments’ portfolios.
Non-operating appropriations
Non-operating appropriations are amounts designated for
the capital needs of entities. Typically, these amounts are equity injections
into entities, or monies for the purchase or development of the assets of
entities. Under the Compact, they can only ever be proposed in a Bill dealing
with the ‘other’ annual services of Government.
Appropriations for payments to
the states
Under section 96 of the Constitution, the
Commonwealth may make payments to the states with or without conditions, and
amounts intended for payments to the states are identified separately. Again,
because of the Compact, amounts to the states can only ever be proposed in a
Bill dealing with the ‘other’ annual services of Government. Amounts to the
Australian Capital Territory and the Northern Territory are also included with
the amounts for the states.
Appropriations for the Parliament
and the Judiciary
In 1981, the Senate Select Committee on Parliament’s
Appropriations and Staffing considered the appropriations for the Parliament, in
view of the unique constitutional position of the Parliament vis-à-vis the
Executive. The Committee noted section 53 of the Constitution’s
reference to the ‘ordinary annual services of the Government’ before observing:
... the Parliament may be ordinary; it may be annual; it may
even be regarded as a service; but it is not a service of the Government. It is
therefore inconsistent with the concept of the separation of powers and the
supremacy of Parliament to treat the provisions made for the Parliament as
being an ordinary annual service of the Government.[21]
The Committee recommended:
... all items of expenditure administered by the Executive
departments on behalf of the Parliament be brought together in [a]
Parliamentary Appropriation Bill ...[22]
Since 1982, the appropriations for the Parliamentary
departments have been provided for via a distinct Appropriation Bill.
Quarantining appropriations in this way only applies to
the Parliamentary departments (of which there are currently four).[23]
It does not extend to other aspects of the finances of the Parliament, such as
providing for the remuneration and allowances of parliamentarians.
Despite the fact that, under the Constitution, the
Judiciary is also distinct from the Executive, there is no equivalent practice
whereby the Judiciary is provided for via a distinct Appropriation Bill.
Supply Acts
A Supply Act generally provides for interim appropriations
out of the Consolidated Revenue Fund to fund the core activities of the
government until the passage of the annual Appropriation Bills. The use of
Supply Acts was a common occurrence from Federation until 1993, as the practice
of successive Commonwealth governments was to deliver the Budget and table the
annual Appropriation Bills after the commencement of the financial year on 1
July. Since 1994, however, the Commonwealth has generally delivered the Budget
and tabled the annual Appropriation Bills in May, prior to the commencement of
the next financial year.[24]
The 2020–21 Supply Acts passed in March 2020 were
necessary as a result of the Budget being delayed until October 2020 as a
result of the COVID–19 pandemic.[25]
Advances to the Finance Minister and the Presiding Officers
The Advance to the Finance Minister or responsible
Presiding Officers of Parliamentary Departments is an appropriation of moneys
without any particular outcome or specific purpose specified. The Finance
Minister or Presiding Officers may use the amount appropriated as an advance to
modify the schedule to the Appropriation Act, but only where:
... the Finance Minister [or Presiding Officer] is satisfied
that there is an urgent need for expenditure, in the current year, that is not
provided for, or is insufficiently provided for, [...]:
(a) because of an erroneous omission or understatement; or
(b) because
the expenditure was unforeseen until after the last day on which it was
practicable to provide for it in the Bill for this Act before that Bill was
introduced into the House of Representatives.[26]
The appropriation allocated to the advance to the Finance
Minister in the Appropriation Bills is $4.0 billion for the ordinary
annual services of the Government[27]
and $6.0 billion in relation to the other annual services of the Government.[28]
For the Presiding Officers of the Parliament, the amounts
of the advance in the Parliamentary Departments Bill are limited to:
- $300,000 each in relation to the:
- Department
of the Senate
- Department
of the House of Representatives and
- Parliamentary
Budget Office and
- $1.0 million in relation to the Department of
Parliamentary Services.[29]
The proposed amounts are less than those which were
contained in the No. 1 Supply Act ($16 billion) and No. 2 Supply
Act ($24 billion); those figures were particularly large in order ‘to
provide the Government with the capacity to allocate additional appropriations
for COVID-19 related responses’ which were not contemplated in the Government’s
response at the time.[30]
However, the amounts still remain higher than those allocated in previous years,
for example, $295 million under the Appropriation Act
(No. 1) 2019–2020 and $380 million under the Appropriation Act
(No. 2) 2019–2020.[31]
According to the Government:
The amount of the AFM [Advance to the Finance Minister] takes
into consideration the evolving nature of the COVID-19 pandemic, allocations
that have been made to date, the uncertainty around what may be required as
part of the Government’s response and the likely need for the Government to act
quickly.[32]
In order to access an advance, the Finance Minister or
Presiding Officers, as the case may be, must issue a determination under the
relevant Appropriation Act. A determination is a legislative instrument, but
disallowance and sunsetting under section 42 and Part 4 of Chapter 3 of the Legislation Act
2003 respectively do not apply.[33]
Further information on the Advance to the Finance Minister
is available from the Parliamentary Library’s Advance
to the Finance Minister: A Quick Guide.[34]
Committee
consideration
Senate
Standing Committee for the Scrutiny of Bills
At the time of writing the Senate Standing Committee for
the Scrutiny of Bills has not commented on the Bills.
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Appropriation
Bills’ compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bills are compatible.[35]
Parliamentary
Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights (PJCHR)
considered the Appropriation Bills in its Scrutiny Digest of 15 October
2020.
The PJCHR has repeatedly raised concerns about whether or
not the allocation of funding proposed in the No. 1 Bill and No. 2 Bill might
engage human rights considerations; particularly given the capacity for
Appropriation Bills to give effect to a reduction in funding for programs that
might be aimed at the realisation of human rights.[36]
The PJCHR has recommended that statements of compatibility
for the No. 1 Bill and No. 2 Bill should contain an assessment of overall
trends in the realisation of economic, social and cultural rights including any
retrogressive measures, the impact of Budget measures on vulnerable groups and
key individual Budget measures which engage human rights, including a brief
assessment of their human rights compatibility.[37]
The Committee draws this matter to the attention of the Minister
and the Parliament on an advice basis only.[38]
The Committee had no comment on the Parliamentary
Departments Bill.[39]
Key
provisions and funding comparison
No. 1 Bill
Clauses 6–9 of the No. 1 Bill outline the quantum
and types of appropriation from the CRF.
Clause 10 of the No. 1 Bill establishes the Advance
to the Finance Minister of $4.0 billion for 2020–2021.
Clauses 11–13 of the No. 1 Bill provide for several
technical matters, including details relating to special accounts, formally
appropriating the amounts required from the CRF and the future repeal of the
Act on 1 July 2023.
Schedule 1 of the No. 1 Bill provides details about
the appropriations to both non-corporate entities and to corporate entities as
defined by the Public
Governance, Performance and Accountability Act 2013 (PGPA Act).
Table 1 below sets out in summary form the amount of
appropriations in Schedule 1 to the No. 1 Bill, the amounts in
the No. 1 Supply Act and the total appropriations for 2020–21. These
amounts are compared to the actual available appropriation in 2019–20.
Table 1: Total Appropriation for 2020–21
| Portfolio |
Appropriation in
Appropriation Bill (No. 1) 2020–2021 |
Appropriation in Supply
Act (No. 1) 2020–2021
|
Total 2020–21
Appropriation |
Actual Available
Appropriation 2019–20[40] |
|
|
$’000 |
$’000 |
$’000 |
$’000 |
| Agriculture, Water and the
Environment |
1,151,889 |
1,242,100 |
2,393,989 |
1,764,502 |
| Attorney‑General’s |
770,946 |
1,047,123 |
1,818,069 |
1,855,034 |
| Defence |
9,439,756 |
21,990,934 |
31,430,690 |
35,651,616 |
| Education, Skills and
Employment |
3,461,202 |
4,245,151 |
7,706,353 |
2,685,212 |
| Finance |
818,533 |
433,702 |
1,252,235 |
763,548 |
| Foreign Affairs and Trade |
3,587,557 |
3,859,128 |
7,446,685 |
6,506,274 |
| Health |
3,690,012 |
12,194,754 |
15,884,766 |
12,730,900 |
| Home Affairs |
3,181,812 |
4,104,656 |
7,286,468 |
7,482,146 |
| Industry, Science, Energy
and Resources |
1,703,836 |
1,765,050 |
3,468,886 |
2,800,150 |
| Infrastructure, Transport, Regional
Development and Communications |
3,160,951 |
2,666,955 |
5,827,906 |
5,189,743 |
| Prime Minister and Cabinet |
998,426 |
1,223,083 |
2,221,509 |
2,038,252 |
| Social Services |
3,640,427 |
17,110,349 |
20,750,776 |
16,856,281 |
| Treasury |
1,203,774 |
4,481,391 |
5,685,165 |
5,112,640 |
|
Total
|
36,809,121 |
76,364,376 |
113,173,497 |
101,436,298 |
No. 2 Bill
Clauses 6–11 of the No. 2 Bill outline the quantum
and types of appropriation from the consolidated revenue fund.
Clause 12 of the No. 2 Bill establishes the Advance
to the Finance Minister of $6.0 billion for 2020–2021.
The money in the No. 2 Bill is appropriated to incorporated
and non-incorporated Government entities according to Schedule 2 of that
Bill as either:
- grants
to the states, territories and local governments (see also clause 14 below)
- new
administered programs or
- non-operating
(or ‘capital’) appropriations.
These three types of appropriations cannot be included in
the No. 1 Bill as they do not relate to the ‘ordinary annual services of
Government’.
Clauses 13–16 of the No. 2 Bill provide for several
technical matters. In particular, clause 14 seeks to ensure that
payments made by the states, territories and local governments from financial
assistance provided by the Commonwealth accord with the conditions established
by the relevant Minister listed in Schedule 1.
Table 2 below sets out in summary form the amount of
appropriations in Schedule 2 to the No. 2 Bill, as well as the
amounts in the No. 2 Supply Act and the total appropriations for 2020–21.
These amounts are compared to the actual available appropriation in 2019–20.
Table 2: Total Appropriation for 2020–21
| Portfolio |
Appropriation in
Appropriation Bill (No. 2) 2020–2021 |
Appropriation in Supply
Act (No. 2) 2020–2021
|
Total 2020–21
Appropriation |
Actual Available
Appropriation 2019–20[41] |
|
|
$’000 |
$’000 |
$’000 |
$’000 |
| Agriculture, Water and the Environment |
2,474,068 |
377,220 |
2,851,288 |
801,772 |
| Attorney‑General’s |
10,135 |
1,164 |
11,299 |
31,787 |
| Defence |
8,495,030 |
3,433,328 |
11,928,358 |
4,234,299 |
| Education, Skills and
Employment |
210,041 |
138,307 |
348,348 |
157,920 |
| Finance |
251,700 |
99,663 |
351,363 |
437,295 |
| Foreign Affairs and Trade |
73,313 |
77,045 |
150,358 |
705,121 |
| Health |
627,605 |
102,243 |
729,848 |
2,823,896 |
| Home Affairs |
85,497 |
60,064 |
145,561 |
186,561 |
| Industry, Science, Energy
and Resources |
682,994 |
318,182 |
1,001,176 |
266,455 |
| Infrastructure, Transport, Regional
Development and Communications |
1,427,598 |
1,908,427 |
3,336,025 |
5,245,487 |
| Prime Minister and Cabinet |
89,220 |
17,595 |
106,815 |
33,636 |
| Social Services |
190,009 |
8,112 |
198,121 |
164,970 |
| Treasury |
237,366 |
124,632 |
361,998 |
261,818 |
|
Total
|
14,854,576 |
6,665,982 |
21,520,558 |
15,351,017 |
Parliamentary Departments Bill
Clause 3 of the Parliamentary Departments Bill
defines the term responsible presiding officer as being:
(a) in relation to the Department of the Senate—the
President of the Senate
(b) in relation to the Department of the House of
Representatives—the Speaker of that House
(c) in
relation to the Department of Parliamentary Services—the President and the
Speaker together or
(d) in relation to the Parliamentary Budget
Office—the President and the Speaker together.
Clauses 6–10 of the Parliamentary Departments Bill
outline the quantum and types of appropriation from the consolidated revenue
fund.
Clause 11 establishes the Advance to the
responsible Presiding Officer for 2020–2021. The amount of appropriation is
limited as follows:
- for
the Department of the Senate—$300,000
- for
the Department of the House of Representatives—$300,000
- for
the Department of Parliamentary Services—$1 million and
- for
the Parliamentary Budget Office—$300,000.
Clauses 12–14 of the Parliamentary Departments Bill
provides for several technical matters, including details relating to special
accounts, formally appropriating the amounts required from the CRF, and the
repeal of the Act at the start of 1 July 2023.
Table 3 below sets out, in summary form, the amount
of appropriations in Schedule 1 to the Parliamentary Departments Bill,
as well as the amounts in the Parliamentary Departments Supply Act and
the total appropriations for 2020–21. These amounts are compared to the actual
available appropriation in 2019–20.
Table 3: Total Appropriation for 2020–21
| Portfolio |
Appropriation in
Appropriation Bill (Parliamentary Departments) 2020–2021 |
Appropriation in Supply
Act (Parliamentary Departments) 2020–2021
|
Total 2020–21
Appropriation |
Actual Available
Appropriation 2019–20[42] |
|
|
$’000 |
$’000 |
$’000 |
$’000 |
| Department of the Senate |
12,228 |
13,983 |
26,211 |
23,853 |
| Department of the House of
Representatives |
10,487 |
14,686 |
25,173 |
25,968 |
| Department of Parliamentary
Services |
115,474 |
116,865 |
232,339 |
203,916 |
| Parliamentary Budget Office |
3,557 |
4,980 |
8,537 |
8,258 |
| Total |
141,746 |
150,514 |
292,260 |
261,995 |