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2022-2023
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION BILL (NO. 3) 2022-2023
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance,
Senator the Honourable Katy Gallagher)
Table of Acronyms and Defined Terms
AAA Actual Available Appropriation
AAO Administrative Arrangements Order
AFM Advance to the Finance Minister
AI Act Acts Interpretation Act 1901
Commonwealth An entity as defined in section 10 of the PGPA Act
entity
corporate entity A corporate Commonwealth entity or a
Commonwealth company within the meaning of the
PGPA Act
CRF Consolidated Revenue Fund
Finance Minister Minister for Finance
GST Goods and Services Tax
non-corporate A non-corporate Commonwealth entity as defined in
entity the PGPA Act, or the High Court of Australia
PGPA Act Public Governance, Performance and Accountability
Act 2013
portfolio Portfolio Budget Statements and Portfolio Additional
statements Estimates Statements
Explanatory Memorandum to Appropriation Bill (No. 3) 2022-2023
House of Representatives 1
Outline
Appropriation Bill (No. 3) 2022-2023
General Outline
1 This Explanatory Memorandum accompanies the Appropriation Bill (No. 3)
2022-2023 (the Bill).
2 The main purpose of the Bill is to propose appropriations from the
Consolidated Revenue Fund (CRF) for the ordinary annual services of the
Government.
3 In accordance with sections 53 and 54 of the Australian Constitution,
appropriations for the ordinary annual services of the Government must be
contained in a separate Bill from other appropriations. Consequently, annual
appropriations that are not for the ordinary annual services of the Government are
proposed in the Appropriation Bill (No. 4) 2022-2023 and Appropriation
(Parliamentary Departments) Bill (No. 2) 2022-2023. The Bill, together with the
Appropriation Bill (No. 4) 2022-2023 and Appropriation (Parliamentary
Departments) Bill (No. 2) 2022-2023 (the Additional Estimates Bills), propose
additional annual appropriations for 2022-23 for expenditure in relation to
Government decisions which have been made since the October 2022-23 Budget.
4 The Additional Estimates Bills supplement annual appropriations provided
in the Supply Acts (Nos. 1 to 4 and Parliamentary Departments Nos. 1 and 2)
2022-2023 and Appropriation Acts (Nos. 1 and 2 and Parliamentary Departments
No. 1) 2022-2023.
5 The Portfolio Additional Estimates Statements are published and tabled in
the Parliament in relation to the Additional Estimates Bills. This Explanatory
Memorandum should be read in conjunction with the various 2022-23 portfolio
statements (being the Portfolio Budget Statements that accompanied the October
2022-23 Budget and the Portfolio Additional Estimates Statements), which
contain details on the appropriations set out in the Schedules to the Bills.
Structure of the Bill
6 The Bill provides for the appropriation of specified amounts for expenditure
by Australian Government entities, primarily being non-corporate Commonwealth
entities (non-corporate entities) under the Public Governance, Performance and
Accountability Act 2013 (PGPA Act).
7 Part 1 of the Bill deals with definitions, the interpretative role of the
portfolio statements and the concept of notional transactions.
8 Part 2 of the Bill proposes appropriations to make payments of the amounts
in Schedule 1 for departmental items (clause 7), administered items (clause 8) and
corporate entity items (clause 9).
Explanatory Memorandum to Appropriation Bill (No. 3) 2022-2023
House of Representatives 2
Outline
9 Part 3 of the Bill deals with credits to special accounts (clause 10), provides
for amounts to be appropriated as necessary (clause 11), and specifies when the
Bill is repealed (clause 12). Clause 11 of the Bill recognises that the
appropriations in the Bill may also be varied by the PGPA Act.
10 The Bill does not contain an Advance to the Finance Minister provision.
Financial Impact
11 The Bill, once enacted, will appropriate the amounts specified in Schedule 1
as set out in clause 6.
Explanatory Memorandum to Appropriation Bill (No. 3) 2022-2023
House of Representatives 3
Statement of Compatibility with Human Rights
Statement of Compatibility with Human Rights
1 The Bill seeks to appropriate money for the ordinary annual services of the
Government.
2 Accordingly, the Bill performs an important constitutional function, by
authorising the withdrawal of money from the CRF for the broad purposes
identified in the Bill.
3 However, as the High Court has emphasised, beyond this, the Appropriation
Acts do not create rights and nor do they, importantly, impose any duties.
4 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.
5 Detailed information on the relevant appropriations, however, is contained
in the portfolio statements.
Explanatory Memorandum to Appropriation Bill (No. 3) 2022-2023
House of Representatives 4
Notes on clauses
Notes on clauses
Part 1--Preliminary
Clause 1--Short title
1 Clause 1 specifies that the short title of the Bill, once enacted, will be the
Appropriation Act (No. 3) 2022-2023.
Clause 2--Commencement
2 Clause 2 provides for the Bill to commence as an Act on the day of the
Royal Assent.
Clause 3--Definitions
3 Clause 3 defines the key terms used in the Bill, such as "administered item",
"non-corporate entity", and "special account".
Clause 4--Portfolio statements
4 Clause 4 declares that the portfolio statements are relevant documents for
the purposes of section 15AB of the Acts Interpretation Act 1901 (AI Act).
Paragraph 15AB(2)(g) of the AI Act provides for material to be considered in the
interpretation of an Act if the material is declared by the Act to be a relevant
document for the purposes of section 15AB of the AI Act.
5 The purpose of the portfolio statements is to provide information on the
proposed allocation of resources to government outcomes by Commonwealth
entities within each portfolio. The term "portfolio statements" is defined in
clause 3 to mean the Portfolio Budget Statements (that accompanied the
Appropriation Bills tabled at the last Budget) and the Portfolio Additional
Estimates Statements tabled in relation to the Bill.
Clause 5--Notional transactions between entities that are part
of the Commonwealth
6 Clause 5 provides that notional transactions between non-corporate entities
are to be treated as if they are real transactions. Notional transactions, therefore,
require the debiting of an appropriation made by the Parliament. The payments of
the amounts in Schedule 1 from one non-corporate entity to another do not
require, in a constitutional sense, an appropriation, because both non-corporate
entities operate within the CRF. For reasons of financial discipline and
transparency, the practice has arisen for these payments between non-corporate
entities to be treated as though they required an appropriation, and to debit an
appropriation when such notional payments are made. This is consistent with
section 76 of the PGPA Act.
Explanatory Memorandum to Appropriation Bill (No. 3) 2022-2023
House of Representatives 5
Notes on clauses
7 When a non-corporate entity makes a payment, whether to another
non-corporate entity or another part of the same non-corporate entity (such as a
different "business unit" within the entity), it is to be treated as a "real" payment.
This means that the appropriation made by the Parliament is extinguished by the
amount of the notional payment, even though no payment is actually made from
the CRF. Similarly, a notional receipt in such a situation is to be treated by the
receiving non-corporate entity (where relevant) as if it were a real receipt. This
does not mean every internal transfer of public money involves a notional
payment and receipt.
Part 2--Appropriation items
Clause 6--Summary of appropriations
8 Clause 6 sets out the total of the appropriations in Schedule 1 to the Bill.
The amounts in Schedule 1 to the Bill may be adjusted in accordance with
sections 74 to 75 of the PGPA Act. Specifically:
• Section 74 of the PGPA Act, when read with Rule 27 of the Public
Governance, Performance and Accountability Rule 2014, permits
non-corporate entities to retain certain types of receipts by adding them to
their most recent departmental item or other type of appropriation in an
Appropriation Act when prescribed.
• Appropriations may be adjusted by amounts recoverable by a non-corporate
entity from the Australian Taxation Office for Goods and Services Tax
(GST), in accordance with section 74A of the PGPA Act. The amounts
specified in Schedule 1 exclude recoverable GST. The appropriations shown
represent the net amount that the Parliament is asked to allocate to particular
purposes.
• Section 74A has the effect of increasing an appropriation by the amount of
the GST qualifying amount arising from payments in respect of the
appropriation. As a result, there is sufficient appropriation for payments
under an appropriation item, provided that the amount of those payments,
less the amount of recoverable GST, can be met from the initial amount
shown against the item in Schedule 1. Section 74A also applies to notional
transactions between and within non-corporate entities.
• Items may be adjusted to take into account the transfer of functions between
non-corporate entities, in accordance with section 75 of the PGPA Act. It is
possible that adjustments under section 75 may result in new items and/or
outcomes being created in an Appropriation Act.
9 Additionally, the Finance Minister manages the payment from items in the
Bill to Commonwealth entities using a discretionary power under section 51 of the
PGPA Act. Section 51 allows the Finance Minister to manage the timing and the
amount of appropriated money to be made available to a Commonwealth entity
(an entity as defined in section 10 of the PGPA Act), except as required by law.
Explanatory Memorandum to Appropriation Bill (No. 3) 2022-2023
House of Representatives 6
Notes on clauses
Clause 7--Departmental items
10 Clause 7 provides that the amount specified in a departmental item for a
non-corporate entity may be applied for the departmental expenditure of the
non-corporate entity. Subclause 3(1) defines:
• "departmental item" to be the total amount set out in Schedule 1 in relation
to a non-corporate entity under the heading "Departmental"; and
• "expenditure" to be payments for expenses, acquiring assets, making loans
or paying liabilities.
11 While the departmental items in Schedule 1 may be divided between
outcomes, the different amounts against outcomes are notional. The total
appropriation for departmental expenses represents the departmental item.
12 Departmental items involve costs over which a non-corporate entity has
control. Departmental appropriations can be used to make any payment related to
the functions of the non-corporate entity including on purposes covered by other
items whether or not they are in the Act for an entity. Expenditure typically
covered by departmental items includes:
• employee expenses, suppliers and other operational expenses (e.g. interest
and finance expenses); and
• costs associated with the replacement of minor departmental assets valued at
$10 million or less and the capitalised maintenance of minor departmental
assets valued at $10 million or less.
13 The cash to meet departmental expenses may be required at times other than
when the expenses are incurred. Departmental items are available until they are
spent, or until the Act through which they were appropriated is repealed. Annual
Appropriation Acts have a lifespan of up to three years after which they
automatically repeal.
14 Generally, if non-corporate entities are directed by the Government to
perform additional activities, they are expected to meet the cost of the additional
activities from their existing appropriations, which may then be replenished by a
departmental appropriation in the following financial year. This is known as
supplementation and applies when the direction was given, or a decision to
propose further appropriations is made, in a timeframe within which it is not
practicable to include the expected expenses in a further Appropriation Bill for
that financial year.
Explanatory Memorandum to Appropriation Bill (No. 3) 2022-2023
House of Representatives 7
Notes on clauses
15 There can also be occasions when a non-corporate entity, such as a portfolio
Department, is required to assist with matters in relation to other areas of the
Government. Examples can include whole-of-Government activities or a portfolio
Department assisting with the formation and initial costs of a new portfolio body
(for which the Department might later be supplemented). Another example would
be where the Government has decided to implement shared services arrangements,
and one non-corporate entity is providing corporate services assistance to another
non-corporate entity.
Clause 8--Administered items
16 Subclause 8(1) provides for the appropriation of administered amounts to
be applied by a non-corporate entity for the purpose of contributing to the
outcome for a non-corporate entity. An "administered item" is defined in clause 3
to be the amount set out in Schedule 1 opposite an outcome for a non-corporate
entity under the heading "Administered". Administered amounts are appropriated
separately for each outcome, so, unlike departmental items, the split across
outcomes is not notional. This makes it clear what the funding is intended to
achieve.
17 The purposes for which each administered item can be spent are further set
out in subclause 8(2). Subclause 8(2) provides that where the portfolio statements
indicate a particular activity is in respect of a particular outcome, then expenditure
on that activity is taken to be expenditure for the purpose of contributing to
achieving that outcome.
18 Administered items are those administered by a non-corporate entity on
behalf of the Government (e.g. certain grants, benefits and transfer payments).
These payments are usually made pursuant to eligibility rules and conditions
established by the Government or the Parliament. Specifically, administered items
are tied to outcomes (departmental items are not).
Clause 9--Corporate entity items
19 Clause 9 provides for appropriations of money for corporate entities to be
paid from the CRF by the relevant Department. Clause 9 provides that payments
for corporate entities must be used for the purposes of those entities.
20 A "corporate entity" is defined in clause 3 to be a corporate Commonwealth
entity or a Commonwealth company within the meaning of the PGPA Act. Many
corporate entities receive funding from appropriations. However, these entities are
legally separate from the Commonwealth, and as a result, do not debit
appropriations or make payments from the CRF.
21 Corporate entity payments are initiated by requests to the relevant portfolio
Departments from the corporate entities. Corporate entities hold the amounts paid
to them on their own account.
Explanatory Memorandum to Appropriation Bill (No. 3) 2022-2023
House of Representatives 8
Notes on clauses
22 Subclause 9(2) provides that if a corporate entity is subject to another Act
that requires amounts appropriated by the Parliament for the purposes of that
entity to be paid to the entity, then the full amount of the corporate entity payment
must be paid to the entity.
23 The purpose of subclause 9(2) is to clarify that subclause 9(1) is not
intended to qualify any obligations in other legislation regulating a corporate
entity, where that other legislation requires the Commonwealth to pay the full
amount appropriated for the purposes of the entity.
24 In addition to the annual appropriations, some corporate entities may also
receive public money from related entities such as a portfolio Department and
from special appropriations managed by those Departments. Many corporate
entities also receive funds from external sources.
Part 3--Miscellaneous
Clause 10--Crediting amounts to special accounts
25 Clause 10 provides that if the purpose of an item in Schedule 1 is also the
purpose of a special account (regardless of whether the item expressly refers to the
special account), then amounts may be debited against the appropriation for that
item and credited to the special account. Special accounts may be established
under the PGPA Act by a determination of the Finance Minister (section 78) that
is disallowable by the Parliament or by another Act (sections 79 and 80). The
determination or Act that establishes the special account will specify the purposes
of the special account.
Clause 11--Appropriation of the Consolidated Revenue Fund
26 Clause 11 provides that the CRF is appropriated as necessary for the
purposes of the Bill. Significantly, this clause means that there is an appropriation
in law when the Act commences. That is, the appropriations are not made or
brought into existence just before they are paid, but when the Act commences.
This clause indicates that the amounts appropriated may be affected by the
PGPA Act, in particular sections 74 to 75 (see clause 6), after the Act commences.
Clause 12--Repeal of this Act
27 Clause 12 provides that the Bill, once enacted, will be repealed at the start
of 1 July 2025.
Explanatory Memorandum to Appropriation Bill (No. 3) 2022-2023
House of Representatives 9
Notes on clauses
Schedule 1--Services for which money is appropriated
28 Schedule 1 specifies the appropriations proposed for the ordinary annual
services of the Government. Schedule 1 contains a summary table which lists the
total amounts for each portfolio. A separate summary table is included for each
portfolio, with other tables detailing the appropriations for each Commonwealth
entity. More details about the appropriations in Schedule 1 are contained in the
portfolio statements and the second reading speech for the Bill.
29 Schedule 1 includes, for information purposes, a figure for the previous
financial year labelled "Actual Available Appropriation (italic figures) -
2021-2022". The Actual Available Appropriation (AAA) is an estimate that does
not affect the amount available at law. That figure provides a comparison with the
proposed appropriations.
30 The AAA is calculated for each item by adding the amounts appropriated in
the previous financial year's annual Appropriation Acts, plus any Advances to the
Finance Minister, and any adjustments under sections 51 and 75 of the PGPA Act.
In some instances, the figure may also be affected by limits applied
administratively by the Department of Finance. In addition, where an entity's
outcome structure has changed since the last Appropriation Act, only ongoing
outcomes may be shown in the Bill. For these reasons, the Actual Available
Appropriation figures may be different from the sum of amounts provided in
earlier Appropriation Acts.
Explanatory Memorandum to Appropriation Bill (No. 3) 2022-2023
House of Representatives 10