Purpose of the Bills

The purpose of the three Appropriation Bills is to release money from the Consolidated Revenue Fund (CRF) only for those March 2022 Budget measures that have been endorsed by the new Government, 2022 election commitments, and other decisions taken by the Government in the October 2022 Budget. Annual funding for the normal running of Government during 2022–23 has been released by a series of Supply Acts.

Appropriation Bill (No. 1) 2022–23

The purpose of the Appropriation Bill (No. 1) 2022–23 (the No. 1 Bill) is to seek an appropriation from the CRF of $10,026,740,000[1] ($10.0 billion) for the ordinary services of Government but only for March 2022 Budget measures endorsed by the new Government, 2022 election commitments, and other decisions taken by the Government in the October 2022 Budget. The Supply Act (No. 1) 2022–23 and the Supply Act (No. 3) 2022–23 have provided funding for all other ordinary services of Government for the financial year 2022–23 that are not included in the No. 1 Bill.

Of the appropriation sought in the No. 1 Bill:

• $3,735,092,000 ($3.7 billion) is for the departmental activities of government entities[2]
• $6,291,648,000 ($6.3 billion) is for the activities that government entities administer on behalf of the Commonwealth Government.[3]

Appropriation Bill (No. 2) 2022–23

The purpose of the Appropriation Bill (No. 2) 2022–23 (the No. 2 Bill) is to seek an appropriation from the CRF of $3,584,263,000[4] ($3.6 billion) for the other services of Government but only for March 2022 Budget measures endorsed by the new Government , 2022 election commitments, and other decisions taken by the Government in the October 2022 Budget. The Supply Act (No. 2) 2022–23 and the Supply Act (No. 4) 2022–23 have provided funding for all other services of Government for the financial year 2022–23 that are not included in the No. 2 Bill.

Of the appropriation sought in the No. 2 Bill:

• $300,088,000 ($0.3 billion) for payments to states, ACT and NT and local governments[5]
• $3,284,175,000 ($3.3 billion) for non-operating activities.[6]

Appropriation (Parliamentary Departments) Bill (No. 1)

The purpose of the Appropriation (Parliamentary Departments) Bill (No. 1) 2022–23 (the Parliamentary Departments Bill) is to seek an appropriation from the CRF of $19,186,000[7] ($19.2 million) for the Parliamentary Departments but only for decisions taken by the Government in the October 2022 Budget. The Supply (Parliamentary Departments) Act (No. 1) 2022–23 and the Supply (Parliamentary Departments) Act (No. 2) 2022–23 have provided funding for all other Parliamentary department services for the financial year 2022–23 that are not included in the Parliamentary Departments Bill.

The entire appropriation sought in the Parliamentary Departments Bill is for the Department of Parliamentary Services and comprises:

• $8,210,000 ($8.2 million) for departmental activities[8]
• $496,000 ($0.5 million) for administered activities[9]
• $10,480,000 ($10.5 million) for non-operating activities.[10]

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 Bill and No. 2 Bill provides for an Advance to the Finance Minister (AFM).

Part 4 of the No. 1 Bill and No. 2 Bill, and Part 3 of the Parliamentary Departments Bill deal with technical matters including crediting amounts to special accounts, the formal appropriation of moneys from the CRF, and the automatic repeal of the subsequent 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

An appropriation is the legal release of money from the CRF.[11] 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.[12]

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 …[13]

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 money received by the Commonwealth must be paid into the CRF and must not be spent before there is an appropriation authorising specific expenditure.

There are two main types of Acts containing appropriations:

• annual Appropriation Acts are those that provide limited funding to Commonwealth entities, such as Departments, to undertake ongoing government activities in a specific year. These appropriations are limited to the amount set out in each Appropriation Act[14]
• Acts that include special appropriations provide authority to spend money for specific purposes (for example, to finance particular projects or provide social security payments). The authority and criteria to appropriate are not set out in the annual Appropriation Acts, but rather Acts that authorise Government to expend money from the CRF for specified purposes, for example, the Social Security (Administration Act) 1999.[15]

Powers of the House of Representative to appropriate

Section 53 of the Constitution provides that laws appropriating money may not originate in the Senate. 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.[16]

Powers of the Senate to amend

The Senate may not amend proposed laws appropriating revenue or money 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.[17]

The Senate may amend proposed laws appropriating revenue or money 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’.[18] 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 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.[19] 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.[20] 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.[21]

Adherence to the Compact has not always been strict, and the High Court has held that any disagreements between the Houses on such Bills are not justiciable.[22] 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.[23] Generally, administered expenses are the costs of programs that agencies run for the Government, while departmental expenses are the costs incurred in running agencies.[24]

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.[25]

Outcomes and programs

While the level of detail necessary for an Appropriation Act to be valid is generally low,[26] in the Pharmaceutical Benefits case the High Court held:

… there cannot be appropriations in blank, appropriations for no designated purpose, merely authorising expenditure ...[27]

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. The Department of Finance explains ‘outcome statements’ in the following terms:

An outcome statement articulates the intended results, activities and target group of an Australian Government entity. An outcome statement serves three main purposes within the financial framework:

• to explain and control the purposes for which annual appropriations are approved by the Parliament for use by entities
• to provide a basis for annual budgeting, including (financial) reporting against the use of appropriated funds to measure and assess entity and program non‐financial performance in contributing to Government policy objectives.[28]

Appropriations for corporate Commonwealth entities

As corporate Commonwealth entities are legally distinct from the Commonwealth itself, money cannot be appropriated directly to those entities.[29] 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 money 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.

Advances to the Finance Minister

The Advance to the Finance Minister is an appropriation of money without any particular outcome or purpose specified.

The Finance Minister may use the amount appropriated as an advance to modify the schedule to the Appropriation Act, but only where:

… the Finance Minister 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.[30]

The amount of appropriation allocated to the Advance to the Finance Minister in Bill No. 1 is $400 million for any purpose and $2,000 million to make provisions for circumstances relating to COVID–19, a natural disaster, and/or a national emergency.[31]

A further amount of appropriation allocated to the Advance to the Finance Minister in Bill No. 2 is $600 million for any purpose and $3,000 million to make provisions for circumstances relating to COVID–19, a natural disaster, and/or a national emergency.[32]

There are no amounts of appropriation for Advances to the Presiding Officers of the Parliament in the Parliamentary Departments Bill.

Supply Bills

‘Supply’ is not mentioned in the Constitution. Section 54 of the Constitution, however, establishes that there shall be at least annual Appropriation Bills that propose appropriation for ‘the ordinary annual services of the Government.’ Securing the passage of annual Appropriation Bills affords the Government the necessary ‘supply’ of monies required to fund its core activities.[33]

If the main Appropriation Bills are unlikely to pass in time for the new financial year, for example where an election interrupts the normal Budget cycle, then Parliament may pass Supply Bills.

Supply Bills are appropriation Bills that propose appropriations for interim funding [from the CRF] …[34]

The Supply Bills normally appropriate money for part of the year and by convention do not include funding for new budget measures. In relation to Supply Bill (No. 1) 2019-2020 Special Minister of State, Alex Hawke stated:

I wish to emphasise that this Bill seeks provision only to fund government expenditure on an interim basis until budget appropriation Bills have passed. Consistent with convention, the Supply Bills do not include funding for budget measures.

This arrangement allows for Appropriation Bill (No. 1) 2019-2020, or a similar bill, to be passed by the next parliament, if necessary.[35]

Committee consideration

Senate Standing Committee for the Scrutiny of Bills

At the time of writing the Senate Standing Committee for the Scrutiny of Bills (the Scrutiny Committee) had not considered the three Appropriation Bills.

Usually, if the Committee makes comments, these largely deal with new measures that are inappropriately classified as ordinary annual services of Government. The reason for this, as previously explained, is that section 53 of the Constitution only allows the Senate to 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’.[36]

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 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.[37]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights (PJCHR) normally considers the Appropriation Bills in its Scrutiny Digest, however, at the time of writing the Committee had not considered the Appropriation Bills.

However, the PJCHR has repeatedly raised concerns about whether or not the allocation of funding proposed in Appropriation Bills 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.[38]

The PJCHR has previously recommended that statements of compatibility for Appropriation Bills 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.[39]

Key issues and provisions

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 $2.4 billion for 2022–2023.

Clauses 11–13 of the No. 1 Bill provide for several technical matters, including details relating to special accounts and formally appropriating the amounts required from the CRF.

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 PGPA Act.

Table 1 below sets out in summary form the amount of appropriations in Schedule 1 to the No. 1 Bill. These amounts do not include the annual amounts appropriated under the Supply Act (No. 1) 2022–23 and the Supply Act (No. 3) 2022–23. They only display amounts that Bill No. 1 seeks to appropriate in 2022–23 for the ordinary services of Government and only for those March 2022 Budget measures endorsed by the new Government, 2022 election commitments, and other decisions taken by the Government in the October 2022 Budget.

Table 1: Total appropriation for No. 1 Bill 2022–23

Source: Appropriation Bill (No. 1) 2022–2023, Schedule 1, abstract.

No. 2 Bill

Clauses 6–11 of the No. 2 Bill outline the quantum and types of appropriation from the CRF.

Clause 12 of the No. 2 Bill establishes the Advance to the Finance Minister of $3.6 billion for 2022–2023.

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’.

Clause 13 of the No. 2 Bill details issues relating to special accounts.

Clause 14 of the No. 2 Bill provides conditions relating to state, territory and local government items.

Clauses 15 and 16 of the No. 2 Bill provide for formally appropriating the amounts required from the CRF and the repeal of the Act.

Table 2 below sets out in summary form, the amount of appropriations in Schedule 2 to the No. 2 Bill. These amounts do not include the annual amounts appropriated under the Supply Act (No. 2) 2022–23 and the Supply Act (No. 4) 2022–23. They only display amounts that Bill No. 2 seeks to appropriate in 2022–23 for the other services of Government and only March 2022 Budget measures endorsed by the new Government, 2022 election commitments, and other decisions taken by the Government in the October 2022 Budget.

Table 2: Total appropriation for No. 1 Bill 2022–23

Source: Appropriation Bill (No. 2) 2022–2023, Schedule 2, abstract.

Parliamentary Departments Bill

Clauses 6–10 of the Parliamentary Departments Bill outline the quantum and types of appropriation from the consolidated revenue fund. The 2022–23 Parliamentary Departments Bill only appropriates money for the Department of Parliamentary Services. The annual appropriations for the Department of the Senate, the Department of the House of Representatives, and the Parliamentary Budget Office have been resourced under the Supply (Parliamentary Departments) Act (No. 1) 2022–23 and the Supply (Parliamentary Departments) Act (No. 2) 2022–23.

Clauses 11–13 of the Parliamentary Departments Bill provide 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 2025.

Schedule 1 sets out an appropriation of $19,186,000 for the Department of Parliamentary Services.