Purpose of the Bills

The Appropriation Bill (No. 3) 2023–2024 (No. 3 Bill), the Appropriation Bill (No. 4) 2023–2024 (No. 4 Bill) and the Appropriation (Parliamentary Departments) Bill (No. 2) 2023–2024 (Parliamentary Departments Bill) underpin the Government’s Mid-Year Economic and Fiscal Outlook (MYEFO). These three Bills are termed the Additional Estimates Appropriation Bills.

The purpose of the No. 3 Bill is to seek an appropriation from the Consolidated Revenue Fund (CRF) of $8,703,757,000 ($8.7 billion) for the ordinary services of Government.[1] Of this appropriation:

• $3,970,480,000 ($4 billion) is for the departmental activities of government entities[2] and
• $4,733,277,000 ($4.7 billion) is for activities that government entities administer on behalf of the Commonwealth Government.[3]

The purpose of the No. 4 Bill is to seek an appropriation for the other services of Government. The No. 4 Bill seeks to appropriate $2,265,360,000 ($2.3 billion) from the CRF.[4] Of this appropriation:

• $5,736,000 ($5.7 million) is for payments to states, the ACT and NT and local government
• $2,259,360,000 ($2.3 billion) is for non-operating activities.[5]

The purpose of the Parliamentary Departments Bill is to appropriate $10,273,000 ($10.3 million) for the Parliamentary departments.[6]

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 Finance Minister’s Advances or the Advance to the Presiding Officers of the Parliamentary departments, as appropriate.

Part 4 of each Bill deals with several technical matters, including crediting amounts to special accounts and formally appropriating the amounts required from the CRF.

Schedule 1 in each Bill provides summary information about the proposed appropriations to be made to the departments and other Commonwealth entities listed.

Background

Under section 14 of the Charter of Budget Honesty Act 1998, the Government must release a MYEFO report ‘by the end of January in each year, or within six months after the last budget, whichever is later’. The Government released the 2023–24 MYEFO on 13 December 2023.[7] The 2023–24 MYEFO updated revenue and expenditure forecasts; it also included announcements of new policy measures.[8]

The Additional Estimates Appropriation Bills will add to or alter the appropriations set out in the 2023–24 Budget Appropriation Acts^[9] to reflect all measures announced in the 2023–24 MYEFO or subsequently. Further details of those measures are included in the 2023–24 MYEFO.

About appropriations

An appropriation is the legal release of monies from the CRF.[10] 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.[11]

There are unique constitutional requirements that a Bill proposing to appropriate money must satisfy. In addition, an appropriation Bill must also comply with certain presentational requirements. The Additional Estimates Appropriation Bills do not deal with standing appropriations.

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 [CRF], 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.

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 introduced following a recommendation by the Governor-General.[12] 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.[13]

Powers of the Senate to amend

The Senate may not amend proposed laws appropriating 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.[14]

The Senate may amend proposed laws appropriating money for purposes other than for the ordinary annual services of the Government, but only if 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.

The ‘ordinary annual services of government’ versus the ‘other’ services of government

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

A working distinction between ordinary and other annual services was agreed in a ‘Compact’ between the Senate and the Government in 1965.[16] 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.[17] 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.[18]

Adherence to the Compact has not always been strict, and the High Court has held that any disagreements between the Houses are not justiciable.[19] Any disputes are to be determined between the Houses themselves.

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.[20] Generally, administered expenses are the costs of programs that agencies run for the Government, while departmental expenses are the costs incurred in running agencies.[21]

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.[22]

Outcomes and programs

While the level of detail necessary for an appropriation Act to be valid is generally low,[23] in the Pharmaceutical Benefits case the High Court held:

… there cannot be appropriations in blank, appropriations for no designated purpose, merely authorising expenditure with no reference to purpose. An Act which merely provided that a minister or some other person could spend a sum of money, no purpose of the expenditure being stated, would not be a valid appropriation Act.[24]

The appropriation Bills must, therefore, also describe in general terms what the money is to be utilised for. These 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’s Outcome Statements Policy and Approval Process explains that:

Outcome statements articulate the intended results, activities and target group of an Australian Government entity.

Within the Budget process, outcome statements:

• provide the basis for the appropriation of Commonwealth money to an entity
• articulate the intended results, activities and target group of the entity
• provide the basis for assessing and reporting on the performance of the entity and the programs it delivers.[25]

Appropriations for corporate Commonwealth entities

As corporate Commonwealth entities are legally distinct from the Commonwealth itself, money cannot be appropriated directly to those entities.[26] 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.[27] Under the Compact, they can only ever be proposed in a bill dealing with the ‘other’ annual services of Government.

Appropriations for payments to the states

Under section 96 of the Constitution, the Commonwealth may make payments to the states with or without conditions, and amounts intended for payments to the states are identified separately. Again, because of the Compact, amounts to the states can only ever be proposed in a bill dealing with the ‘other’ annual services of Government. Amounts to the Australian Capital Territory and the Northern Territory are also included with the amounts for the states.

Appropriations for the Parliament and the Judiciary

In 1981, the Senate Select Committee on Parliament’s Appropriations and Staffing considered the appropriations for the Parliament, in view of the unique constitutional position of the Parliament vis-à-vis the Executive. The Committee noted section 53 of the Constitution’s reference to the ‘ordinary annual services of the Government’ before observing:

… the Parliament may be ordinary; it may be annual; it may even be regarded as a service; but it is not a service of the Government. It is therefore inconsistent with the concept of the separation of powers and the supremacy of Parliament to treat the provisions made for the Parliament as being an ordinary annual service of the Government.[28]

The Committee recommended:

… all items of expenditure administered by the Executive departments on behalf of the Parliament be brought together in [a] Parliamentary Appropriation Bill …[29]

Since 1982, the appropriations for the Parliamentary departments have been provided for via a distinct appropriation Bill.

Quarantining appropriations in this way only applies to the Parliamentary departments (of which there are currently four).[30] It does not extend to other aspects of the finances of the Parliament, such as providing for the remuneration and allowances of parliamentarians.

Despite the fact that under the Constitution the Judiciary is also distinct from the Executive, there is no equivalent practice whereby the Judiciary is provided for via a distinct Appropriation Bill.

Advances to the Finance Minister and the Presiding Officers

The Additional Estimates Appropriation Bills all propose to replenish any amounts drawn from the advance to the Finance Minister or the responsible Presiding Officers of Parliamentary Departments. The advances, established in the first appropriation Acts each year, are an appropriation of money without any particular outcome or specified purpose.

The Finance Minister may use the amount appropriated as an advance to modify the schedule to an 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.[31]

An equivalent legislative scheme exists for the Presiding Officers.[32]

In order to access an advance, the Finance Minister or Presiding Officers must issue a determination^[33] under the relevant appropriation Act.[34] At the time of writing, no determinations have been made against Appropriation Act (No. 1) 2023–24 or Appropriation Act (No. 2) 2023–24 or Appropriation (Parliamentary Departments) Act (No. 1) 2023–24.

Committee consideration

Senate Standing Committee for the Scrutiny of Bills

At the time of writing, the Additional Estimates Appropriation Bills had not been considered by the Senate Standing Committee for the Scrutiny of Bills.

Financial implications

The No. 3 Bill proposes to appropriate $8,703,757,000 ($8,7 billion) from the CRF.

The No. 4 Bill proposes to appropriate $2,265,360,000 ($2.3 billion) from the CRF.

The Parliamentary Departments Bill proposes to appropriate $10,273,000 ($10.3 million) from the CRF.

The total amount of money proposed to be appropriated by the three Bills is $10,979,390,000 ($11 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 Additional Estimates Appropriation Bills’ compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act.

The Government states each of the Additional Estimates Appropriation Bills perform:

… 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, the Appropriation Acts do not create rights and nor do they, importantly, impose any duties.

Given that the legal effect of Appropriation Acts 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.[35]

Parliamentary Joint Committee on Human Rights

At time of writing, the Additional Estimates Appropriation Bills had not been considered by the Parliamentary Joint Committee on Human Rights. However, the Committee stated in 2023:

… the allocation of funds via appropriations bills is susceptible to a human rights assessment that is directed at broader questions of compatibility. … The committee also considers that a statement of compatibility with human rights should address the compatibility of measures which directly impact human rights and which are not addressed elsewhere in legislation, as the appropriation bills may be a key opportunity for the Parliament to consider the compatibility of the measure with human rights. The committee considers that further information is required to fully assess the compatibility of the measure, and is seeking further information from the minister.[36]

Key issues and provisions

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, formally appropriating the amounts required from the CRF, and the future repeal of the Act on 1 July 2026.

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 1 below sets out in summary form the amount of appropriations in Schedule 1 of the No. 3 Bill.

Table 1  Appropriations in the No. 3 Bill

Source: Appropriation Bill (No. 3) 2023–2024, Schedule 1. 

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, formally appropriating the amounts required from the CRF, and the future repeal of the Act on 1 July 2026.

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
• non-operating (or ‘capital’) appropriations.

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

Table 2 below sets out in summary form the amount of appropriations in Schedule 1 of the No. 4 Bill.

Table 2  Appropriations in the No. 4 Bill

- indicates nil

Source: Appropriation Bill (No. 4) 2023–2024, Schedule 1. 

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 12–13 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 2026.

Table 3 below sets out, in summary form, the amount of appropriations in Schedule 1 to the Parliamentary Departments No. 2 Bill.

Table 3  Appropriation in the Parliamentary Departments No. 2 Bill

- indicates nil

Source: Appropriation (Parliamentary Departments) Bill (No. 2) 2023–2024, Schedule 1.