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Links: The links to the Appropriation
Bill (No. 5) 2017–2018 and the Appropriation
Bill (No. 6) 2017–2018, their Explanatory Memoranda and second reading speeches
can be found on the Bill’s home pages, or 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 June 2018.
The Bills Digest at a glance
Appropriation Bill (No. 5) 2017–2018
and Appropriation Bill (No. 6) 2017–2018 are additional Appropriation Bills
tabled late in the financial year to allow the Government to fund new programs
announced in the Budget, but which commence before the start of the next
financial year, and make other technical adjustments in anticipation of the 2018–19
Budget.
This Bills Digest contains background material including
the constitutional and other requirements for Appropriation Bills, and a
summary of the information available on the purpose of the appropriations.
Purpose of
the Bill
The Appropriation Bill (No. 5) 2017–2018 (the No. 5 Bill)
seeks to appropriate $1,689,023,000 of additional revenue out of the
consolidated revenue fund (CRF) for the ordinary annual services of the
Government.[1]
The Appropriation Bill (No. 6) 2017–2018 (the No. 6 Bill)
seeks to appropriate $6,208,830,000 of additional revenue out of the CRF for
the other services of the Government that are not the ordinary annual services
of the Government.[2]
Structure
of the Bill
Part 1 of each Bill 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 each Bill replenishes the relevant
Advance to the Finance Minister (AFM).[3]
Part 4 of each Bill deals with several technical
matters, including details relating to special accounts and formally
appropriates the amounts required from the CRF.
Schedule 1 of each Bill provides the amounts of the
appropriations to be made to the departments and other Commonwealth bodies
listed.
Background
Appropriations
An appropriation is the legal release of moneys from the
CRF. The Appropriation Acts are the authoritative source for details of annual
appropriations provided to agencies. The Acts take precedence over budget
papers, portfolio budget statements and other associated materials.
There are certain unique constitutional requirements that
a Bill proposing to appropriate moneys must satisfy. An appropriation Bill must
also comply with certain presentational requirements.
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 ...[4]
Section 83 of the Constitution provides that no money
may be withdrawn from the CRF ‘except under appropriation made by law’.[5]
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.
Appropriation Acts 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 either in an authority in the
Constitution (other than the appropriation provision) or under a valid
law of the Commonwealth.[6]
Proposed laws appropriating moneys 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 introduced following a recommendation by the
Governor-General.[8]
By convention the Governor–General acts only upon the advice of the Executive,
so section 56 prevents non–government members of the House of Representatives
introducing Bills that would propose to appropriate money from the CRF.[9]
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.[10]
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:
- 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:
- the construction of public works and
buildings;
- the acquisition of sites and buildings;
- 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);
- grants to the states under section 96 of
the Constitution;
- new policies not previously authorised by
special legislation;
- items regarded as equity injections and
loans; and
- 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:
- the
initial payment in effect represents a new policy decision and therefore should
be in Appropriation Bill (No. 2); and
- 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).
- 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.
The
Senate’s powers
Section 53 of the Constitution provides, among
other things, that 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.
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’.[15]
Conceivably, the Senate could amend an appropriation Bill for the other
services of government so as 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.
Appropriations
through the year
Budget
Each year, Appropriation Bill (No. 1) is introduced with
the Budget and appropriates funds for the ‘ordinary annual services of the
Government’. Appropriation Bill (No. 2)—which is also introduced with the
Budget—appropriates funds for other annual services. A third Appropriation
Bill—Appropriation (Parliamentary Departments) Bill (No. 1)—funds the
parliamentary departments.
Additional
estimates
Funding requirements usually change after the Budget is
brought down. The Government may require additional funding if the amounts in
the three budget Appropriation Acts are inadequate. If so, the Government has
to seek parliamentary approval for the additional expenditure. The process
whereby additional funds are provided is called ‘additional estimates’ and
usually begins around November of the budget year. The approved additional
funding is incorporated into Appropriation Bills (No. 3) and (No. 4) and
Appropriation (Parliamentary Departments) Bill (No. 2). These Bills are the
counterparts of Appropriation Bills (No. 1) and (No. 2) and Appropriation
(Parliamentary Departments) Bill (No. 1) respectively.
Supplementary
Additional Estimates
In some years, the Government may decide to introduce
further Appropriation Bills following the additional estimates process. When
this occurs, it is often done at the same time that the next year’s budget
Bills are tabled. Additional Appropriation Bills tabled late in the year allow
the Government to fund new programs announced in the Budget, but which commence
before the start of the next financial year, and make other technical
adjustments in anticipation of the next year’s budget.
Presentational
requirements
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.[16]
Generally, administered expenses are the costs of programs that agencies run
for the Government, while departmental expenses are the costs incurred in
running agencies.[17]
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.[18]
Purposes
While the level of detail necessary for an Appropriation
Act to be valid is generally low,[19]
in the Pharmaceutical Benefits case the High Court held:
... there cannot be appropriations in blank, appropriations for
no designated purpose, merely authorising expenditure ...[20]
The Appropriation Bills must therefore 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:
... outcome statements articulate Government objectives and
form an integral part of the appropriations framework. They:
- explain
the purpose for which annual appropriations are approved by the Parliament for
use by entities;
- provide a basis for budgeting and reporting against
the use of appropriated funds; and
- measure
and assess entity and program non-financial performance in contributing to
Government objectives.
An outcome statement should provide an immediate impression
of what success looks like.[21]
Outcome statements, therefore, tend to be aspirational in
nature.
Appropriations
for corporate Commonwealth entities
As corporate Commonwealth entities are legally distinct
from the Commonwealth itself,[22]
monies cannot be appropriated directly to those entities. 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.
Advance to
the Finance Minister
The Advance to the Finance Minister (AFM) is the
appropriation of moneys to the Finance Minister without any particular outcome
or purpose specified. The AFM is established in the first two Appropriation
Acts each year,[23]
and is subsequently replenished whenever supplementary Appropriation Acts are
passed. The Finance Minister may allocate the moneys appropriated as AFM to
outcomes already provided for in that same Appropriation Act 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, in
the existing Appropriation Act:
- 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 the Act before it was introduced
into the House of Representatives.[24]
The amount of appropriation allocated to the AFM each year
has typically been limited to $295 million for the ordinary annual services of
government, and $380 million for the other annual services of government. The
Finance Minister tables an annual report in Parliament on the use of the AFM.[25]
Senate Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills
had no comment on the Bills.[26]
Financial
implications
The No. 5 Bill seeks to appropriate $1,689,023,000 from
the CRF.[27]
The No. 6 Bill seeks to appropriate $6,208,830,000 from the CRF.[28]
The total amount of money the two Bills seek to appropriate is $7,897,853,000.
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. In relation
to the human rights implications of the Bills, the Explanatory Memorandum of
each Bill notes:
... the Bill performs an important constitutional function, by
authorising the withdrawal of money from the CRF for the broad purposes
identified in the Bill.
However, as the High Court has emphasised, beyond this,
Appropriation Acts do not create rights and nor do they, importantly, impose
any duties.
Given that the legal effect of Appropriation Bills is limited
in this way, the Bill is not seen as engaging, or otherwise affecting, the
rights or freedoms relevant to the Human Rights (Parliamentary Scrutiny) Act
2011.
Detailed information on the relevant appropriations, however,
is contained in the portfolio statements.[29]
Parliamentary
Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights has
repeatedly stated that it considers that Appropriation Bills may engage human
rights; 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.[30]
In its assessment of the Bills, the Committee referred to
its comments in relation to prior Appropriation Bills before stating as
follows:
The committee notes that, as with previous appropriations
bills, the statements of compatibility for the current bills provide no
assessment of their compatibility with human rights on the basis that they do
not engage or otherwise create or impact on human rights. However, while the
committee acknowledges that appropriations bills present particular challenges
in terms of human rights assessments, the appropriation of funds may engage and
potentially limit or promote a range of human rights that fall under the
committee's mandate.
Given the difficulty of conducting measure-level assessments
of appropriations bills, the committee recommends that consideration be given
to developing alternative templates for assessing their human rights
compatibility, drawing upon existing domestic and international precedents.
Relevant factors in such an approach could include consideration of:
- whether the bills are compatible
with Australia's obligations of progressive realisation with respect to
economic, social and cultural rights;
- whether any reductions in the
allocation of funding are compatible with Australia's obligations not to
unjustifiably take retrogressive or backward steps in the realisation of
economic, social and cultural rights; and
- whether the allocations are
compatible with the rights of vulnerable groups (such as children; women;
Aboriginal and Torres Strait Islander Peoples; persons with disabilities; and
ethnic minorities).[31]
The Committee recommended that departmental officials meet
with it ‘to develop workable approaches to statements of compatibility for
appropriations bills’ and sought the advice of the Minister on the proposed
course of action.[32]
Key issues
and provisions
Key
provisions
Part 1 of each of the No. 5 and No. 6 Bills deals
with preliminary matters, including when the Acts commence, and how to
interpret the Acts. Clause 4 of each of the No. 5 and No. 6 Bills
provides that the accompanying Portfolio Statements may be used as extrinsic
materials to interpret the Acts.[33]
Part 2 of each of the No. 5 and No. 6 Bills outlines
the quantum and types of appropriation from the consolidated revenue fund.[34]
In the No. 5 Bill, the money is appropriated to departments
as departmental or administered appropriation for outcomes, or payments for
corporate Commonwealth entities within the meaning of the Public Governance,
Performance and Accountability Act 2013. The details of appropriations
are outlined in Schedule 1 of that Bill.
In the No. 6 Bill, the money is appropriated to departments
as appropriations for:
- grants
to the states, territories and local governments
- new
programs
- non-operating
(or ‘capital’) appropriations
- payments
to departments for on-payment to corporate Commonwealth entities under the Public
Governance, Performance and Accountability Act.
Part 3 of each of the No. 5 and No. 6 Bills
replenishes the AFM. The replenishment of the AFM established under the Appropriation Act
(No. 1) 2017–2018 and the Appropriation Act
(No. 2) 2017–2018 means that the Finance Minister, after the
passage of the two Bills, will have the same amount of discretionary
appropriation available as at the start of the financial year.
Part 4 of each of the No. 5 and No. 6 Bills ensures
that if an appropriation is made for purposes that are covered by a Special
Account, then the Special Account is replenished by the same amount as the
appropriation (clause 11 in the No. 5 Bill and clause 13 in the
No. 6 Bill).[35]
Part 4 also contains the provisions formally appropriating moneys from
the CRF, subject to the effect of certain provisions of the Public
Governance, Performance and Accountability Act (clause 12 in the No.
5 Bill and clause 14 in the No. 6 Bill).
Schedule 1 in each of the No. 5 and No. 6 Bills
specifies the amounts to be appropriated for individual departments, and payments
for Commonwealth entities.
Funding
amounts in the No. 5 and No. 6 (2017–2018) Bills
The Portfolio Supplementary Additional Estimates
Statements (PSAESs) usually provide some information on the additional
appropriations included in Appropriation Bills No. 5 and No. 6. The level of
detail provided varies between portfolios. The following list summarises some
of the key information available from the PSAESs, the Appropriation Bills and
the second reading speeches.
The appropriation amounts do not directly reflect the
funding attached to particular measures—rather, the appropriation to a
particular agency or department reflects the net appropriation requirement in
2017–18 after the interaction of a number of policy changes and other factors.
Agriculture
and Water Resources Portfolio
- $1.985
million for additional departmental funding and $0.050 million for additional
administered funding in the No. 5 Bill.[36]
Attorney-General’s
Portfolio
- $0.241
million for the High Court to implement security measures as part of the
2018–19 Budget in the No. 6 Bill to enable these capital projects to commence
as soon as possible.[37]
Defence
Portfolio
- $947.846
million for departmental funding in the No. 5 Bill to better align Defence
Integrated Investment Program funding with Defence capability project
operational requirements.[38]
Education
and Training Portfolio
- $167.282
million as administered funding in the No. 5 Bill to implement the Research and
Investment Plan as informed by the national Research Infrastructure Roadmap.[39]
Environment
and Energy Portfolio
- $434.557
million to continue to deliver the Reef 2050 Long Term Sustainability Plan.[40]
Health
Portfolio
- $44.478
million in the No. 5 Bill of which $12.281 million is for departmental expenses
and $32.197 million for administered expenses.[41]
- $0.496
million in the No. 6 Bill as non-operating expenses.[42]
Home
Affairs Portfolio
- $31.950
million in the No. 5 Bill for departmental expenses and $94.263 million in the
No. 6 Bill for non-operating expenses primarily for the Home Affairs ICT
systems upgrade.[43]
Jobs and
Innovation Portfolio
- $60.226
million in the No. 5 Bill of which $0.109 million is for departmental expenses
and $60.117 million for administered expenses.[44]
This additional funding is for the measure ‘doubling our investment in
Australia’s supercomputing infrastructure’, a component of funding for the
measure ‘Hydrogen Energy Supply Chain project - pilot’, and transfer of funds
to the Regional Jobs and Investment Package within the Infrastructure, Regional
Development and Cities portfolio.[45]
Prime
Minister and Cabinet
- $0.270
million in the No. 5 Bill for additional departmental expenses.[46]
Social
Services Portfolio
- $0.379
million in the No. 5 Bill for additional departmental expenses and $0.280
million in the No. 6 Bill for non-operating expenses.[47]
[1]. Clause
6 of the Appropriation
Bill (No. 5) 2017–2018.
[2]. Clause
6 of the Appropriation
Bill (No. 6) 2017–2018.
[3]. The
AFM is, broadly speaking, the appropriation of moneys to the Finance Minister
without any particular outcome or purpose specified, to enable the Finance
Minister to allocate moneys where there is an urgent need for expenditure, in
the current year, that is not provided for, or is insufficiently provided for,
in the existing Appropriation Act, subject to certain conditions. The framework
for the AFM is discussed in more detail below.
[4]. Commonwealth of
Australia Constitution Act (The Constitution), section 81.
[5]. The Constitution,
section 83.
[6]. Pape
v Commissioner of Taxation (2009) 238 CLR 1, [2009]
HCA 23.
[7]. The Constitution,
section 53.
[8]. The Constitution,
section 56.
[9]. BC
Wright, ed, House
of Representatives practice, sixth edn, Department of the House of
Representatives, Canberra, 2012, p. 420.
[10]. The Constitution,
section 53.
[11]. R
Laing, ed, Odgers’
Australian Senate practice, 14th edn, The Senate, Canberra,
2016, p. 386.
[12]. Senate
Standing Committee on Appropriations, Staffing and Security, 50th
report: ordinary annual services of the government, The Senate,
Canberra, June 2010, p. 3.
[13]. Laing,
ed, Odgers’
Australian Senate practice, op. cit., p. 387.
[14]. Osborne
v Commonwealth (1911) 12 CLR 321 at 336, [1911] HCA
19.
[15]. The Constitution,
section 53.
[16]. Australian
Accounting Standards Board (AASB), Administered
items, AASB 1050, December 2007.
[17]. The
Department of Finance describes administered appropriation items as ‘normally
related to activities governed by eligibility rules and conditions established
by the Government or parliament such as grants, subsidies and benefit payments’,
Department of Finance, ‘Guide
to appropriations’.
[18]. Combet
v Commonwealth (2005) 224 CLR 494, [2005]
HCA 61 at para. 123.
[19]. Ibid.
[20]. Attorney-General
(Vic); Ex rel Dale v Commonwealth (“Pharmaceutical Benefits case”) (1945) 71
CLR 237 at para. 253, [1945] HCA
30.
[21]. Department
of Finance, Guide
to preparing the 2018–19 portfolio budget statements, Department of
Finance, p. 33.
[22]. Public Governance,
Performance and Accountability Act 2013 (Cth), section 11,
‘Note’.
[23]. Department
of Finance, ‘Advance
to the Finance Minister’, Department of Finance website, last updated 12
July 2017.
[24]. See
clause 10 of the Appropriation
Bill (No. 5) 2017–2018 and section 10 of the Appropriation Act
(No. 1) 2017–2018; clause 12 of the Appropriation
Bill (No. 6) 2017–2018 and section 12 of the Appropriation Act
(No. 2) 2017–2018.
[25]. Department
of Finance, ‘Advance
to the Finance Minister’, op. cit.
[26]. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 6, 2018, The Senate, 20
June 2018, p. 54.
[27]. Appropriation
Bill (No. 5) 2017–2018, clause 6.
[28]. Appropriation
Bill (No. 6) 2017–2018, clause 6.
[29]. Explanatory
Memorandum, Appropriation Bill (No. 5) 2017–2018, p. 4; Explanatory
Memorandum, Appropriation Bill (No. 6) 2017–2018, p. 4.
[30]. Parliamentary
Joint Committee on Human Rights, Human
rights scrutiny report, 5, 19 June 2018, pp. 49–50.
[31]. Ibid.,
pp. 51–2.
[32]. Ibid.,
p. 52.
[33]. The
portfolio statements are relevant documents for the purposes of section 15AB of
the Acts
Interpretation Act 1901 (Cth).
[34]. In
particular clause 6 of each Bill.
[35]. For
a discussion of special accounts see Department of Finance, ‘Special
appropriations: special accounts’, Department of Finance website.
[36]. Australian
Government, Portfolio
supplementary additional estimates statements, 2017–18:
Agriculture and Water Resources Portfolio, 2018, p. 5.
[37]. Australian
Government, Portfolio
supplementary additional estimates statements, 2017–18:
Attorney-General’s Portfolio, 2018, p. 3.
[38]. D
Coleman, ‘Second
reading speech: Appropriation Bill (No. 5) 2017–2018’, House of
Representatives, Debates, 8 May 2018, p. 3354.
[39]. Ibid.
[40]. Ibid.
[41]. Appropriation
Bill (No. 5) 2017–2018, ‘Summary of appropriations’, p. 11.
[42]. Appropriation
Bill (No. 6) 2017–2018, ‘Summary of appropriations’, p. 11.
[43]. Australian
Government, Portfolio
supplementary additional estimates statements 2017–18: Home Affairs Portfolio,
2018, p. 2; D Coleman, ‘Second
reading speech: Appropriation Bill (No. 6) 2017–2018’, House of
Representatives, Debates, 8 May 2018, p. 3354.
[44]. Appropriation
Bill (No. 5) 2017–2018, ‘Summary of appropriations’, p. 11.
[45]. Australian
Government, Portfolio
supplementary additional estimates statements, 2017–18:
Industry, Innovation and Science Portfolio, 2018, p. 1.
[46]. Appropriation
Bill (No. 5) 2017–2018, ‘Summary of appropriations’, p. 11.
[47]. Ibid.,
p. 11; Appropriation
Bill (No. 6) 2017–2018, ‘Summary of appropriations’, p. 11.
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