Purpose of the Bills

The purpose of Appropriation Bills (the Bills) is to release money from the Consolidated Revenue Fund (CRF) for the annual services of the Government.

Appropriation Bill (No. 1) 2023–24

The purpose of the Appropriation Bill (No. 1) 2023–24 (the No. 1 Bill) is to seek an appropriation from the CRF of $146,174,564,000 ($146.2 billion)[1] for the ordinary services of Government. Of the appropriation sought in the No. 1 Bill:

• $70,154,828,000 ($70.2 billion) is for the departmental activities of government entities[2]
• $76,019,736,000 ($76.0 billion) is for the activities that government entities administer on behalf of the Commonwealth Government.[3]

The No. 1 Bill commences on the later of 1 July 2023 and Royal Assent.

Appropriation Bill (No. 2) 2023–24

The purpose of the Appropriation Bill (No. 2) 2023–24 (the No. 2 Bill) is to seek an appropriation from the CRF of $28,182,598,000 ($28.2 billion)[4] for the other services of Government. Of the appropriation sought in the No. 2 Bill:

• $1,031,289,000 ($1.0 billion) is for payments to states, territories and local governments[5]
• $27,151,309,000 ($27.2 billion) is for non-operating activities.[6]

The No. 2 Bill commences on the later of 1 July 2023 and Royal Assent.

Appropriation (Parliamentary Departments) Bill (No. 1) 2023–24

The purpose of the Appropriation (Parliamentary Departments) Bill (No. 1) 2023–24 (the Parliamentary Departments No. 1 Bill) is to seek an appropriation from the CRF of $314,465,000 ($314.5 million)[7] for the parliamentary departments. Of the appropriation sought in the Parliamentary Departments No. 1 Bill:

• $252,878,000 ($252.9 million) is for the departmental activities of parliamentary departments[8]
• $6,387,000 ($6.4 million) is for the administrative functions of parliamentary departments[9]
• $55,200,000 ($55.2 million) is for the non-operating expenses of the Department of Parliamentary Services.[10]

The Parliamentary Departments No. 1 Bill commences on the later of 1 July 2023 and Royal Assent.

Appropriation Bill (No. 3) 2022–23

The purpose of the Appropriation Bill (No. 3) 2022–23 (the No. 3 Bill) is to seek an appropriation from the CRF of an additional $5,509,802,000 ($5.6 billion)[11] for the ordinary services of Government in the 2022–23 financial year. Of the appropriation sought in the No. 3 Bill:

• $2,444,055,000 ($2.4 billion) is for the departmental activities of government entities[12]
• $3,065,747,000 ($3.1 billion) is for the activities that government entities administer on behalf of the Commonwealth Government.[13]

These amounts are in addition to amounts appropriated by:

• Supply Act (No. 1) 2022–2023 ($80,343,711,000)
• Supply Act (No. 3) 2022–2023 ($48,929,762,000) and
• Appropriation Act (No. 1) 2022–2023 ($10,026,740,000).

The No. 3 Bill commences on Royal Assent.

Appropriation Bill (No. 4) 2022–23

The purpose of the Appropriation Bill (No. 4) 2022–23 (the No. 4 Bill) is to seek an appropriation from the CRF of an additional $164,348,000 ($164.3 million)[14] for the other services of Government in the 2022–23 financial year, which is all for non-operating activities.[15]

These amounts are in addition to amounts appropriated by:

• Supply Act (No. 2) 2022–2023 ($10,668,871,000)
• Supply Act (No. 4) 2022–2023 ($9,770,226,000) and
• Appropriation Act (No. 2) 2022–2023 ($3,584,263,000).

The No. 4 Bill commences on Royal Assent.

Appropriation (Parliamentary Departments) Bill (No. 2) 2022–23

The purpose of the Appropriation (Parliamentary Departments) Bill (No. 2) 2022–23 (the Parliamentary Departments No. 2 Bill) is to seek an appropriation from the CRF of an additional $560,000 ($0.6 million)[16] for the parliamentary departments in the 2022–23 financial year, which is all departmental funding for the Department of the House of Representatives.[17]

These amounts are in addition to amounts appropriated by:

• Supply (Parliamentary Departments) Act (No. 1) 2022–2023 ($113,541,000)
• Supply (Parliamentary Departments) Act (No. 2) 2022–2023 ($155,107,000) and
• Appropriation (Parliamentary Departments) Act (No. 1) 2022–2023 ($19,186,000).

The Parliamentary Departments No. 2 Bill commences on Royal Assent.

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 2023–24, whereas Part 3 of the Parliamentary Departments No. 1 Bill establishes the Advance to the responsible Presiding Officer for 2023–24.

Part 4 of both the No. 1 Bill and the Parliamentary Departments No. 1 Bill, Part 5 of the No. 2 Bill, and Part 3 of the No. 3, No. 4 and Parliamentary Departments No. 2 Bill deal 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.

Part 4 of the No. 2 Bill sets the maximum amounts that can be drawn each year from the CRF for grants that the Commonwealth makes to the states and territories under the Federal Financial Relations Act 2009. These limits are known as ‘debit limits’.

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, the Parliamentary Departments No. 1 Bill, the No. 3 Bill, the No. 4 Bill and the Parliamentary Departments No. 2 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.[18] 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 Constitution.[19]

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 …

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 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 the Appropriation Act[20]
• 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.[21]

The Financial Framework (Supplementary Powers) Act 1997 provides general powers for the Commonwealth to approve certain types of expenditures, such as grants, or for the Commonwealth to set up companies.[22] This provides a general coverage for appropriations in instances where no other Act provides the authority. A list of programs and entities covered by these powers are provided in the Financial Framework (Supplementary Powers) Regulations 1997.[23]

Powers of the House of Representatives 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.[24]

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.[25]

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’.[26] 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.[27] 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.[28] On 22 June 2010, the Senate resolved as follows:

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.

That appropriations for expenditure on:

1. the construction of public works and buildings;
2. the acquisition of sites and buildings;
3. 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);
4. grants to the states under section 96 of the Constitution;
5. new policies not previously authorised by special legislation;
6. items regarded as equity injections and loans; and
7. 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.

That, in respect of payments to international organisations:

1. the initial payment in effect represents a new policy decision and therefore should be in Appropriation Bill (No. 2); and
2. 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.[29]

Adherence to the Compact has not always been strict, and the High Court of Australia has held that any disagreements between the Houses on such Bills are not justiciable.[30] 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.[31] Generally, administered expenses are the costs of programs that agencies run for the Government, while departmental expenses are the costs incurred in running agencies.[32]

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.[33]

Outcomes and programs

While the level of detail necessary for an Appropriation Act to be valid is generally low,[34] in the Pharmaceutical Benefits case the High Court held:

… there cannot be appropriations in blank, appropriations for no designated purpose, merely authorising expenditure ...[35]

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.[36]

Appropriations for corporate Commonwealth entities

As corporate Commonwealth entities are legally distinct from the Commonwealth itself, money cannot be appropriated directly to those entities.[37] 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 and the Presiding Officers

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, […]:

because of an erroneous omission or understatement; or

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.[38]

The amount of appropriation allocated to the Advance to the Finance Minister in the No. 1 Bill is $400 million.[39]

A further amount of appropriation allocated to the Advance to the Finance Minister in the No.2 Bill is $600 million.[40]

The amount of appropriation allocated to the Advance to the responsible Presiding Officer in the Parliamentary Departments No. 1 Bill is:

• $300,000 for the Department of the Senate
• $300,000 for the Department of the House of Representatives
• $1 million for the Department of Parliamentary Services
• $300,000 for the Parliamentary Budget Office.[41]

There are no amounts of appropriation for Advances to the Finance Minister in the No. 3 and No. 4 Bills, nor Advances to the responsible Presiding Officer in the Parliamentary Departments No. 2 Bill.

Debit limits

In addition to appropriating moneys for the other annual services of the Government, Part 4 of the No. 2 Bill also sets a maximum amount—known as a ‘debit limit’—that may be provided to the states and territories under grant programs specified in this Part. In this case, clause 13 specifies ‘general purpose financial assistance’ under section 9 and ‘national partnership payments’ under section 16 of the Federal Financial Relations Act 2009.

The legal appropriation for a grant program is provided by the special appropriation in section 80 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), which provides a standing appropriation for debits from special accounts. However, subsections 9(3) and 16(3) of the Federal Financial Relations Act allows an annual appropriation Bill to set a maximum amount that may be debited from the COAG Reform Fund for that financial year in relation to general purpose financial assistance or national partnership payments, respectively.[42] If no debit limit is specified, no amounts may be credited to or debited from the COAG Reform Fund for that financial year in relation to general purpose financial assistance or national partnership payments.[43]

Because the Compact prevents the No. 1 Bill from dealing with grants to the states and territories, the debit limits are set in the No. 2 Bill.

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 these six 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’.

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.[44]

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 these 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.[45]

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.[46]

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 $400 million for 2023–24.

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 of the No. 1 Bill. These amounts are compared to the actual available appropriation in 2022–23.

Table 1 Total Appropriation for 2023–24 (No. 1 Bill)

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 $600 million for 2023–24.

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 16 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 sets appropriation limits for provisions of the Federal Financial Relations Act. For 2023–24 these debit limits are:

1. for general purpose assistance to the states and territories: $5,000,000,000 and
2. for national partnership payments: $35,000,000,000.

Clause 14 provides that the debit limits set under clause 13 are adjusted to take into account any GST liability that may arise in relation to particular payments.

Clauses 15–17 of the No. 2 Bill provide for several technical matters.

Table 2 below sets out in summary form, the amount of appropriations in Schedule 2 to the No. 2 Bill. These amounts are compared to the actual available appropriation in 2022–23.

Table 2 Total Appropriation for 2023–24 (No. 2 Bill)

Parliamentary Departments No. 1 Bill

Clause 3 of the Parliamentary Departments No. 1 Bill defines the term responsible presiding officer as being:

1. in relation to the Department of the Senate—the President of the Senate
2. in relation to the Department of the House of Representatives—the Speaker of that House
3. in relation to the Department of Parliamentary Services—the President and the Speaker together or
4. in relation to the Parliamentary Budget Office—the President and the Speaker together.

Clauses 6–10 of the Parliamentary Departments No. 1 Bill outline the quantum and types of appropriation from the consolidated revenue fund.

Clause 11 establishes the Advance to the responsible Presiding Officer for 2023–24. 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
• for the Parliamentary Budget Office—$300,000.

Clauses 12–14 of the Parliamentary Departments 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 2026.

Table 3 below sets out, in summary form, the amount of appropriations in Schedule 1 to the Parliamentary Departments No. 1 Bill. These amounts are compared to the actual available appropriation in 2022–23.

Table 3 Total Appropriation for 2023–24 (Parliamentary Departments Bill)

No. 3 Bill

Clauses 6–9 of the No. 3 Bill outline the quantum and types of appropriation from the CRF.

Clauses 10–12 of the No. 3 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. 3 Bill provides details about the appropriations to both non-corporate entities and to corporate entities as defined by the PGPA Act.

Table 4 below sets out in summary form the amount of appropriations in Schedule 1 of the No. 3 Bill. These amounts are compared to the Budget appropriation in 2022–23.

Table 4 Total Appropriation for 2022–23 (No. 3 Bill)

• indicates nil

No. 4 Bill

Clauses 6–11 of the No. 4 Bill outline the quantum and types of appropriation from the CRF.

Clauses 12–14 of the No. 4 Bill provide for several technical matters, including details relating to special accounts and formally appropriating the amounts required from the CRF.

The money in the No. 4 Bill is appropriated to incorporated and non-incorporated Government entities according to Schedule 1 of that Bill as either:

• grants to the states, territories and local governments (see also clause 16 below)
• new administered programs or
• non-operating (or ‘capital’) appropriations.

These three types of appropriations cannot be included in the No. 3 Bill as they do not relate to the ‘ordinary annual services of Government’.

Table 5 below sets out in summary form the amount of appropriations in Schedule 1 of the No. 4 Bill. These amounts are compared to the Budget appropriation in 2022–23.

Table 5 Total Appropriation for 2022–23 (No. 4 Bill)

Parliamentary Departments No. 2 Bill

Clauses 6–10 of the Parliamentary Departments No. 2 Bill outline the quantum and types of appropriation from the consolidated revenue fund.

Clauses 11–13 of the Parliamentary Departments No. 2 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 2025.

Table 6 below sets out, in summary form, the amount of appropriations in Schedule 1 to the Parliamentary Departments No. 2 Bill. These amounts are compared to the Budget appropriation in 2022–23.

Table 6 Total Appropriation for 2022–23 (Parliamentary Departments No. 2 Bill)