Bills Digest no. 115 2015–16

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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.

Daniel Weight, Economics Section
Paula Pyburne, Law and Bills Digests Section
3 May 2016

 

Contents

Purpose of the Bills
Structure of the Bills
Background
Committee consideration
Policy position of non-government parties/independents
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions

 

Date introduced: 2 May 2016
House:  House of Representatives
Portfolio:  Finance
Commencement: The later of Royal Assent or 1 July 2016

Links: The links to the Bills, their Explanatory Memoranda and second reading speeches can be found on the homepages for the Supply Bill (No.1) 2016-17; the Supply Bill (No. 2) 2016-17; and the Supply (Parliamentary Departments) Bill (No. 1) 2106-17 or through the through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at May 2016.

Purpose of the Bills

This Bills Digest refers to three Bills.

The purpose of Supply Bill (No. 1) 2016-17 (Supply Bill No. 1) is to propose appropriations in the amount of $35,032,450,000 from the Consolidated Revenue Fund (CRF) which are broadly equivalent to 5/12ths of the estimated 2016–17 annual appropriations for the ordinary annual services of the Government—excluding Budget measures. The balance of the annual appropriations for the ordinary annual services of the Government for 2016–17 including Budget measures for that year will be in Appropriation Bill (No.1) 2016–17 (Appropriation Bill No. 1).

The purpose of Supply Bill (No. 2) 2016-17 (Supply Bill No. 2) is to propose appropriations in the amount of $6,000,158,000 from the CRF which are broadly equivalent to 5/12ths of the estimated 2016–17 annual appropriations that are not for the ordinary annual services of the Government.

The purpose of Supply (Parliamentary Departments) Bill (No. 1) 2016-17 (Parliamentary Departments Supply Bill) is to propose appropriations in the amount of $96,752,000 from the CRF which are broadly equivalent to 5/12ths of the estimated 2016–17 annual appropriations for expenditure in relation to the Parliamentary Departments—excluding Budget measures.

Due to the speed with which the Bills are expected to pass both the House of Representatives and the Senate this Bills Digest merely sets out the nature of the Bills and the rationale for their introduction. Analysis of the contents of the various Portfolio Budget Statements will be prepared separately by the Parliamentary Library.

Structure of the Bills

Part 1 of each of the Bills deals with preliminary matters, including when the Acts commence, and how to interpret them.

Part 2 of each Bill outlines the quantum and types of appropriation from the CRF.

Part 3 of Supply Bill No. 1 and Supply Bill No. 2 establishes the Advance to the Finance Minister (AFM) for
2016–17, whereas, Part 3 of the Parliamentary Departments Supply Bill establishes the Advance to the responsible Presiding Officer for 2016–17.

Part 4 of the Supply Bill No. 2 deals with the drawing right limits (an administrative restriction on spending, but not an appropriation).

Part 4 of the Supply Bill No. 1 and the Parliamentary Departments Supply Bill and Part 5 of the Supply Bill No. 2 provide for several technical matters, including but not limited to details relating to special accounts and formally appropriating the amounts required from the CRF.

Schedule 1 of the Supply Bill No. 1 and the Parliamentary Departments Supply Bill and Schedule 2 of the Supply Bill No. 2 provide details about the appropriations to both non-corporate entities and to corporate entities as defined by the Public Governance, Performance and Accountability Act 2013.

Schedule 1 of the Supply Bill No. 2 lists the Ministers responsible for determinations of payments to, or for, the states, ACT, NT and local government.

Background

About appropriations

An appropriation is the legal release of monies from the Consolidated Revenue Fund (CRF).[1] 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.[2]

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 that:

All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund [CRF], to be appropriated for the purposes of the Commonwealth …[3]

Section 83 of the Constitution provides that no money may be withdrawn from the CRF ‘except under appropriation made by law’.[4] The effect of these two sections is that all monies received by the Commonwealth must be paid into the CRF, and must not be spent before there is an appropriation authorising specific expenditure.

The ‘ordinary annual services of Government’ versus ‘other’ services of Government

Section 54 of the Constitution requires that there be a separate law appropriating funds for the ‘ordinary annual services of the Government’, and that other matters must not be dealt with in the same Bill.[5] However, what constitutes the ‘ordinary annual services of the Government’ and the ‘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.[6] 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.[7] 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.[8]

Adherence to the Compact has not always been strict, and the High Court has held that any disagreements between the Houses are not justiciable.[9] Any disputes, therefore, are to be determined between the Houses themselves.

The rationale for the supply bills

On Thursday 28 April 2016, the Finance Minister, Senator Cormann, confirmed that the Government would be introducing Supply Bills in the next meeting of the Parliament.[10] Senator Cormann said:

These Bills will ensure continuity of the normal business of government in the context of a double-dissolution election.[11]

The need for Supply Bills arises because of the Prime Minister’s intention to request that the Governor-General dissolve both Houses of the Parliament on or before 11 May 2016, and the truncated time the Parliament will have to consider the annual Appropriation Bills for 2016‑17.[12]

Supply Bills

A Supply Bill 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 introduction of Supply Bills 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.[13]

Most recent use—1996

The most recent introduction of Supply Bills into Parliament was on 8 May 1996.[14] The need for Supply Bills in that case arose because of the timing of the 1996 Federal Election, which resulted in a change of government in March 1996 and rendered the delivery of a Budget in May 1996 impractical. The Supply Bills comprised:

• Supply Bill (No. 1) 1996-1997
• Supply Bill (No. 2) 1996-1997, and
• Supply (Parliamentary Departments) Bill 1996-1997.[15]

The appropriations proposed by Supply Bill (No. 1) 1996-1997 totalled $14.7 million.[16] The appropriations proposed by Supply Bill (No. 2) 1996-1997 totalled $1.7 million and provided:

… interim authority for proposed expenditure on the construction of public works and buildings, the acquisition of sites and buildings, certain advances and loans, items of plant and equipment which are clearly definable as capital in nature, grants to the states under section 96 of the Constitution and for payments to the Northern Territory and the Australian Capital Territory.[17]

The Supply (Parliamentary Departments) Bill 1996-97 proposed the appropriation of $68 million for the ongoing operations of the Parliament.[18]

The 1996-97 Supply Bills were debated in the House of Representatives for six days from 20 May to 29 May 1996.[19] The first readings of the Bills in the Senate took place on 30 May 1996 and the Bills passed the Senate the following day.[20] The Bills were given Royal Assent on 14 June 1996.[21]

Together, the Bills proposed to appropriate 5/12ths of the annual funding required. This provided for funding until the end of November 1996, by which time it was anticipated that the annual Appropriation Bills would have come into force. Without the passage of these Supply Bills, funding for the core activities of the government would have been depleted soon after 1 July 1996.

Supply and the dissolution of the Parliament

Commonwealth of Australia

Whether or not a Governor-General would agree to a Prime Minister’s request for a double dissolution of the Parliament without supply having been secured is uncertain.

Disregarding the events that culminated in the dismissal of the Whitlam Government on 11 November 1975—where Governor-General Kerr dissolved the Parliament otherwise than on the advice of his Prime Minster—there is no example of a Governor-General accepting a recommendation to dissolve the House of Representatives and hold an election (double dissolution or otherwise) without the government first having secured from the Parliament sufficient supply to fund its ongoing activities.

Elsewhere

There are only a few instances of a similar situation arising elsewhere.

For example, in 1872 the New Zealand Governor Sir George Bowen refused a request to dissolve the New Zealand House of Representatives from Premier (as the position was known then) Edward Stafford. The reasons for refusing the dissolution were manifold, but included that there was no supply available to ensure the ongoing operations of the public service. Governor Bowen asserted that he could not consider a request for a dissolution unless supply had been ensured for a period of three months.[22] 

The 1877, Tasmanian Governor Frederick Weld was asked to dissolve the Fysh Parliament, but declined. While a lack of supply was not an issue in that decision, in a memorandum by Governor Weld to Premier Fysh, subsequently tabled in the Tasmanian Assembly, Weld asserted that he, as Governor:

had no right to suppose that the parliament would depart from the usual and most constitutional course of voting the necessary supplies for the period that must elapse before the meeting of the new parliament.[23]

Further, Governor Weld asserted the principle that:

nothing but the most extreme and clear public necessity would justify the Crown in dissolving after supplies had been refused.[24]

Whether or not Governor Weld’s view represents a sound constitutional principle, however, is uncertain. In The King and His Dominion Governors, HV Evatt, for example, appears to express some doubt over the matter.[25]

In any case, it appears that the likelihood of the forthcoming Supply Bills not being passed by the Parliament is remote. In a recent debate on Appropriation Bill (No. 3) 2015-2016 and Appropriation Bill (No. 4) 2015-2016, Australian Labor Party (ALP) Senator Sam Dastyari stated:

The Labor Party has a principled position about not blocking supply, a principled position we intend to maintain… The principle behind this is that we will treat [the Bills package] as supply and, as such, it will be supported.[26]

Nonetheless, it would appear that whether—and when—the Government is able to secure supply could have a bearing on the timing of the intended dissolution of the Houses of the Parliament.

Committee consideration

Selection of Bills Committee

At the time of writing this Bills Digest none of the Bills had been referred to Committee for inquiry and report.

Senate Standing Committee for the Scrutiny of Bills

At the time of writing this Bills Digest the Senate Standing Committee for the Scrutiny of Bills had not commented on the Bills.

Policy position of non-government parties/independents

ALP

Reiterating the comments of Senator Dastyari, Dr Andrew Leigh stated in the House of Representatives that Labor will not block supply.[27]

Greens

Adam Bandt, for the Australian Greens has said:

There is a distinction between keeping the ordinary machinery of government going, which is what supply bills are about—and that is what we are debating now—and, on the other hand, how we deal with the budget. The Greens will block unfair budget measures. The Greens will not support tax cuts in this budget while our schools and hospitals are struggling to find the money that they need. People can be assured that the harsh and unfair impacts of this budget that require separate legislation to this Bill we are dealing with at the moment will be blocked in the next Parliament if people vote for the Greens in enough numbers.[28]

Financial implications

The Supply Bill No. 1 seeks to appropriate approximately $35 billion from the CRF. The Supply Bill No. 2 seeks to appropriate approximately $6 billion from the CRF. The Parliamentary Departments Supply Bill seeks to appropriate approximately $96 million from the CRF.

 The total amount of money sought to be appropriated by the three Bills is $41.1 billion.

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 Bill’s 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 Bill is compatible.[29]

Parliamentary Joint Committee on Human Rights

At the time of writing this Bills Digest the Parliamentary Joint Committee on Human Rights had not commented on the Bills.

Key issues and provisions

Supply Bill No. 1

Clauses 6–9 of Supply Bill No. 1 outline the quantum and types of appropriation from the CRF.

Clause 10 of Supply Bill No. 1 establishes the Advance to the Finance Minister for 2016–17. The Advance to the Finance Minister is the appropriation of monies to the Finance Minister without any particular outcome or purpose specified. The Advance to the Finance Minister is established in both Supply Bill No. 1 and Supply Bill No. 2. The amount of appropriation allocated to the Advance to the Finance Minister each year has typically been limited to $295 million for the ordinary annual services of Government. This is the amount allocated in subclause 10(3) of Supply Bill No. 1. The Finance Minister tables an annual report in Parliament on the use of the Advance to the Finance Minister.[30]

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

Schedule 1 of the Supply Bill No. 1 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.

The table below sets out in summary form, the amounts in Schedule 1 to Supply Bill No. 1, approximates the total for 2016–17 and compares it to the appropriation in 2015–16. When considering the figures in the table, it should be kept in mind that while the appropriation set out Supply Bill No. 1 is generally based on 5/12 of the estimated 2016–17 annual appropriation, entities ‘with a disproportionally high level of expenditure early in the financial year’ may receive proportionately more.[31]

Table 1: Comparison with 2015–16

Portfolio	Appropriation in Supply Bill (No. 1) 2016–2017 (Supply for 5/12ths of year)	Appropriation in Supply Bill (No. 1) 2016–2017, converted to 12/12ths (full year)	Appropriation in Appropriation Act (No. 1) 2015–2016[32]	Actual Available Appropriation 2015–16[33]
	$’000	$’000	$’000	$’000
Agriculture and Water Resources	397,322	953,572	463,540	726,779
Attorney‑General’s	1,228,932	2,949,437	3,651,808	2,825,214
Communications and the Arts	982,683	2,358,439	1,754,082	2,264,346
Defence	12,432,242	29,837,381	29,404,935	29,606,271
Education and Training	985,903	2,366,167	2,015,007	2,005,084
Employment	988,654	2,372,770	2,118,161	2,118,188
Environment	602,742	1,446,581	1,965,588	1,577,962
Finance	466,489	1,119,574	676,496	695,028
Foreign Affairs and Trade	2,696,110	6,470,664	5,832,123	5,889,391
Health	4,361,881	10,468,514	7,603,427	8,911,542
Immigration and Border Protection	1,836,515	4,407,636	4,609,577	5,057,099
Industry, Innovation and Science	877,968	2,107,123	2,326,259	2,100,177
Infrastructure and Regional Development	589,301	1,414,322	1,529,107	1,264,029
Prime Minister and Cabinet	835,024	2,004,058	1,879,379	1,941,156
Social Services	3,729,804	8,951,530	10,678,037	8,083,523
Treasury	2,020,880	4,850,112	4,458,888	4,509,970
Total	35,032,450	84,077,880	80,966,414	79,575,759

The Portfolio Budget Statements will be published and tabled in the Parliament in relation to Appropriation Bill No. 1. They will cover both Supply Bill No. 1 and Appropriation Bill No. 1.

Supply Bill No. 2

Clauses 6–11 of the Supply Bill No. 2 outline the quantum and types of appropriation from the consolidated revenue fund.

Clause 12 establishes the Advance to the Finance Minister for 2016–17. (See discussion about the Advance to the Finance Minister in relation to Supply Bill No. 1 above.) The amount of appropriation allocated to the Advance to the Finance Minister each year has typically been limited to $380 million for the other annual services of Government. This is the amount allocated in subclause 12(3) of Supply Bill No. 2.

The money in the Supply Bill No. 2 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 Supply Bill No. 1 as they do not relate to the ‘ordinary annual services of Government’.

Clause 13 of Supply Bill No 2 sets appropriation limits for provisions of specific Acts. Clause 14 provides that the debt 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 Supply Bill No. 2 provide for several technical matters. In particular, clause 16 of the Supply Bill No. 2 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 Minister listed in Schedule 1.

The table below sets out in summary form, the amounts in Schedule 2 to Supply Bill No. 2, approximates the total for 2016–17 and compares it to the appropriation in 2015–16.

Table 2: Comparison with 2015–16

Portfolio	Appropriation in Supply Bill (No. 2) 2016–2017 (Supply for 5/12ths of year)	Appropriation in Supply Bill (No. 1) 2016–2017, converted to 12/12ths (full year)	Appropriation in Appropriation Act (No. 2) 2015–2016[34]	Actual Available Appropriation 2015–16[35]
	$’000	$’000	$’000	$’000
Agriculture and Water Resources	186,054	446,530	251,283	323,301
Attorney‑General’s	30,481	73,154	137,260	109,788
Communications and the Arts	3,482,054	8,356,930	7,388,134	7,417,286
Defence	970,373	2,328,895	2,883,870	2,544,209
Education and Training	19,801	47,522	58,500	63,721
Employment	—	—	9,333	15,408
Environment	67,766	162,638	109,097	166,745
Finance	23,666	56,798	156,690	159,069
Foreign Affairs and Trade	464,829	1,115,590	232,611	228,881
Health	74,656	179,174	40,151	189,031
Immigration and Border Protection	93,944	225,466	370,547	432,547
Industry, Innovation and Science	33,716	80,918	99,376	102,233
Infrastructure and Regional Development	380,449	913,078	2,952,401	3,330,005
Prime Minister and Cabinet	22,004	52,810	48,293	50,519
Social Services	85,607	205,457	161,661	156,247
Treasury	64,758	155,419	106,151	195,280
Total	6,000,158	14,400,379	15,005,358	15,484,270

Parliamentary Departments Supply Bill

Clause 3 of the Parliamentary Departments Supply 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 Supply Bill outline the quantum and types of appropriation from the consolidated revenue fund.

Clause 11 establishes the Advance to the responsible Presiding Officer for 2016–17. 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.

These figures reflect those in the Appropriation (Parliamentary Departments) Bill (No. 1) 2015–16.

Clauses 12–14 of the Parliamentary Departments Supply 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 2019.

The table below sets out in summary form, the amounts in Schedule 2 to Supply Bill No. 2, approximates the total for 2016–17 and compares it to the appropriation in 2015–16.

Table 3: Comparison with 2015–16

Department	Appropriation in Parliamentary Departments Supply Bill (Supply for 5/12ths of year)	Appropriation in Parliamentary Departments Supply Bill, converted to 12/12ths (full year)	Appropriation in Appropriation (Parliamentary Departments) Bill (No. 1) 2015–16[36]	Actual Available Appropriation 2015–16[37]
	$’000	$’000	$’000	$’000
Department of the Senate	8,436	20,246	21,503	21,503
Department of the House of Representatives	9,058	21,739	22,134	22,134
Department of Parliamentary Services	76,374	183,298	182,368	182,368
Parliamentary Budget Office	2,884	6,922	7,410	7,410
Total	96,752	232,205	233,415	233,415

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

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