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2013-2014-2015
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION (PARLIAMENTARY DEPARTMENTS) BILL (NO. 2)
2014-2015
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance,
Senator the Honourable Mathias Cormann)
Table of Acronyms and Defined Terms
AI Act Acts Interpretation Act 1901
PD Act (No. 1) Appropriation (Parliamentary Departments) Act
(No. 1) 2014-2015
APO Advance to the responsible Presiding Officer
Commonwealth An entity as defined in section 10 of the PGPA Act
entity
CRF Consolidated Revenue Fund
Finance Minister Minister for Finance
FMA Act Financial Management and Accountability Act 1997
GST Goods and Services Tax
non-corporate Non-corporate Commonwealth entities as defined in
entities the PGPA Act or the High Court
PGPA Act Public Governance, Performance and Accountability
Act 2013
PGPA (C&T) Act Public Governance, Performance and Accountability
(Consequential and Transitional Provisions) Act 2014
PGPA Rules Public Governance, Performance and Accountability
Rule 2014
portfolio Portfolio Budget Statements and Portfolio Additional
statements Estimates Statements
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 2) 2014-2015
House of Representatives 1
Outline
Appropriation (Parliamentary Departments)
Bill (No. 2) 2014-2015
General Outline
1 This Explanatory Memorandum accompanies Appropriation (Parliamentary
Departments) Bill (No. 2) 2014-2015 (the Bill).
2 The main purpose of the Bill is to propose appropriations from the
Consolidated Revenue Fund (CRF) for expenditure in relation to the
Parliamentary Departments.
3 Appropriations for the ordinary annual services of the Government must be
contained in a separate Bill from other appropriations in accordance with
sections 53 and 54 of the Australian Constitution. Consequently, the Bill proposes
appropriations for the Parliamentary Departments, which are not for the ordinary
annual services of the Government. Annual appropriations that are for the
ordinary annual services of the Government are proposed in Appropriation Bill
(No. 3) 2014-2015. Other annual appropriations that are not for the ordinary
annual services of the Government are proposed in Appropriation Bill (No. 4)
2014-2015. Together these three Bills are termed the Additional Estimates
Appropriation Bills.
4 The Portfolio Additional Estimates Statements are published and tabled in
the Parliament in relation to the Bill. This Explanatory Memorandum should be
read in conjunction with the various 2014-2015 portfolio statements (being the
Portfolio Budget Statements that accompanied the 2014-2015 Budget and the
Portfolio Additional Estimates Statements) for the Parliamentary Departments,
which contain details on the appropriations set out in Schedule 1 of the Bill.
5 Importantly, the Bill has been drafted to take account of the Public
Governance, Performance and Accountability Act 2013 (PGPA Act), which came
into effect on 1 July 2014 and replaces the Financial Management and
Accountability Act 1997 (FMA Act) and the Commonwealth Authorities and
Companies Act 1997 (CAC Act). As part of the transition of the Acts
appropriating money, the Bill includes notes to provide clarity around provisions
within the FMA Act that continue to operate until the completion of the actions
involved.
Structure of appropriations in the Bill
6 The Bill provides for the appropriation of specified amounts for expenditure
by the Parliamentary Departments.
7 Part 1 of the Bill deals with definitions, the interpretative role of the
portfolio statements and the concept of notional transactions.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 2) 2014-2015
House of Representatives 2
Outline
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),
administered assets and liabilities items (clause 9) and other departmental items
(clause 10). Part 3 of the Bill specifies the way in which the amounts in
Schedule 1 may be adjusted.
9 Part 4 of the Bill deals with miscellaneous items including matters relating
to special accounts (clause 12), the appropriation of the CRF (clause 13) and
specifies the cessation date of the Bill, once enacted (clause 14). In addition to the
adjustment provision in Part 3, clause 13 of the Bill recognises that the
appropriations in the Bill may also be varied by both the PGPA and FMA Acts, as
it continues to apply due to the Public Governance, Performance and
Accountability (Consequential and Transitional Provisions) Act 2014
(PGPA (C&T) Act).
Financial Impact
10 The Bill, if enacted, would appropriate the amounts specified in Schedule 1.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 2) 2014-2015
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Statement of compatibility with human rights
Statement of compatibility with human rights
1 The Bill seeks to appropriate money for expenditure by the Parliamentary
Departments.
2 Accordingly, this Appropriation Bill performs an important constitutional
function, by authorising the withdrawal of money from the Consolidated Revenue
Fund 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 Bills is limited in this way, the
Appropriation 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 (Parliamentary Departments) Bill (No. 2) 2014-2015
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Notes on clauses
Notes on clauses
Part 1--Preliminary
Clause 1--Short title
1 This clause specifies that the short title of the Bill, once enacted, will be the
Appropriation (Parliamentary Departments) Act (No. 2) 2014-2015.
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",
"departmental item" and "non-corporate entity". Each Parliamentary Department
is a non-corporate entity for the purposes of the Public Governance, Performance
and Accountability Act 2013 (PGPA Act).
Clause 4--Portfolio statements
4 Clause 4 declares that the portfolio statements are relevant documents under
paragraph 15AB(2)(g) of the Acts Interpretation Act 1901 (AI Act) that may be
used to ascertain the meaning of certain provisions in accordance with
subsection 15AB(1) of the AI Act. Paragraph 15AB(2) of the AI Act effectively
provides that the material that may be considered in the interpretation of a
provision of an Act includes any document that is declared by the Act to be a
relevant document.
5 The purpose of the portfolio statements is to provide information on the
proposed allocation of resources to the outcomes of the Parliamentary
Departments. The portfolio statements provide information to enable Parliament
to understand the purpose of appropriations proposed in the Bill. The term
"portfolio statements" is defined in the Bill, at 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 with this Bill).
Clause 5--Notional transactions between entities that are part
of the Commonwealth
6 Clause 5 ensures that payments between non-corporate entities result in a
debit from the appropriation for the paying non-corporate entity. For example, 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. However, 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
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 2) 2014-2015
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Notes on clauses
to debit an appropriation when such notional payments are made. This is
consistent with section 76 of the PGPA Act.
7 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 Parliament. 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.
8 This means that the appropriation made by 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
9 Clause 6 sets out the total of the appropriations in Schedule 1 of the Bill.
Importantly, the amounts in Schedule 1 may be adjusted under Part 3 of the Bill.
10 The amounts in Schedule 1 of the Bill may be adjusted further in accordance
with sections 30A and 31 of the FMA Act, which continue to apply due to the
Public Governance, Performance and Accountability (Consequential and
Transitional Provisions) Act 2014 (PGPA (C&T) Act), as well as sections 74 and
75 of the PGPA Act. Specifically:
Appropriations may be adjusted by amounts recoverable by a Parliamentary
Department from the Australian Taxation Office for Goods and Services
Tax (GST), in accordance with section 30A of the FMA Act. The amounts
specified in Schedule 1 exclude recoverable GST. The appropriations shown
represent the net amount that Parliament is asked to allocate to particular
purposes.
Section 30A 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 30A also applies to notional
transactions between and within non-corporate entities.
Departmental items may be increased to take into account certain other
amounts received by a Parliamentary Department, if those receipts are
prescribed by the Public Governance, Performance and Accountability Rule
2014 (PGPA Rule), in accordance with section 74 of the PGPA Act.
Section 74 of the PGPA Act permits non-corporate entities to retain certain
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 2) 2014-2015
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Notes on clauses
types of receipts by adding them to their most recent departmental item or
other type of appropriation in an Appropriation Act when prescribed. For
example, PGPA Rule 27 prescribes amounts that offset costs in relation to
the activities of a non-corporate entity and amounts that relate to an
employee's leave (including amounts received under the paid parental leave
scheme that was established on 1 January 2011).
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.
Clause 7--Departmental items
11 Clause 7 provides that the amount specified in a departmental item for a
Parliamentary Department may be applied for the departmental expenditure of the
Parliamentary Department. Clause 3 defines:
"departmental item" to be the total amount set out in Schedule 1 in relation
to a Parliamentary Department under the heading "Departmental"; and
"expenditure" to be payments for expenses, acquiring assets, making loans
or paying liabilities.
12 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.
13 Departmental items involve costs over which a Parliamentary Department
has control. Departmental appropriations can be used to make any payment
related to the functions of the Parliamentary Department including on purposes
covered by other items whether or not they are in the Act for a Parliamentary
Department. Expenditure typically covered by departmental items includes
employee expenses, suppliers and other operational expenses (e.g. interest and
finance expenses).
14 Departmental items include amounts specifically to meet costs associated
with the acquisition and capitalised maintenance of existing departmental assets
valued at $10 million or less.
15 Departmental items are not expressed in terms of a particular financial year
and do not automatically lapse. Departmental items are available until they are
spent, or the Act through which they were appropriated is repealed or sunsets.
Because the cash to meet expenses can be required at times other than when the
expenses are incurred, the departmental appropriations remain available until
required.
16 The Minister for Finance (Finance Minister) manages the payment from
departmental items by the Parliamentary Departments using a discretionary power
under section 51 of the PGPA Act. Section 51 allows the Finance Minister to
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 2) 2014-2015
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Notes on clauses
manage the timing and the amount of appropriated money to be made available to
a Commonwealth entity, except as required by law.
17 Until 30 June 2015, the Finance Minister may also manage payments through
the issuing of drawing rights in accordance with sections 26 and 27 of the FMA
Act, which continue to apply because of Part 2 of Schedule 2 to the
PGPA (C&T) Act. Drawing rights control who may spend money from
appropriations, and allow for conditions and limits to be set by the Finance
Minister (or the Finance Minister's delegate) in relation to those activities.
Clause 8--Administered items
18 Subclause 8(1) provides for the appropriation of administered expense
amounts to be applied by a Parliamentary Department for the purpose of
contributing to the outcome for an administered item. An "administered item" is
defined in clause 3 to be the amounts set out in Schedule 1 opposite an outcome
for a Parliamentary Department under the heading "Administered". Administered
amounts are appropriated separately for outcomes, so, unlike departmental items,
the split across outcomes is not notional. This helps to make it clear what the
funding is intended to achieve.
19 The appropriations for administered items in Schedule 1 represent the
amounts required to meet the total estimated expenses for the administered
outcomes for 2014-2015.
20 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.
21 Administered items are those administered by a Parliamentary Department.
Specifically, administered items are tied to outcomes (departmental items are not).
22 The Finance Minister manages payments from administered items by
Parliamentary Departments 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,
except as required by law.
23 Until 30 June 2015, the Finance Minister may also manage payments
through the issuing of drawing rights in accordance with sections 26 and 27 of the
FMA Act, which continue to apply because of the PGPA (C&T) Act. Drawing
rights control who may spend money from appropriations, and allow for
conditions and limits to be set by the Finance Minister (or the Finance Minister's
delegate) in relation to those activities.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 2) 2014-2015
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Notes on clauses
Clause 9--Administered assets and liabilities items
24 Clause 9 provides amounts in Schedule 1 to acquire new administered
assets, enhance existing administered assets and/or discharge administered
liabilities relating to activities administered by the Parliamentary Departments.
Administered assets and liabilities appropriations are provided for functions
managed by a Parliamentary Department. Administered assets and liabilities items
can also be applied for any outcomes of a Parliamentary Department.
25 The Finance Minister manages payments from administered assets and
liabilities items by Parliamentary Departments 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, except as required by law.
26 Until 30 June 2015, the Finance Minister may also manage payments through
the issuing of drawing rights in accordance with sections 26 and 27 of the FMA
Act, which continue to apply because of the PGPA (C&T) Act. Drawing rights
control who may spend money from appropriations, and allow for conditions and
limits to be set by the Finance Minister (or the Finance Minister's delegate) in
relation to those payments.
Clause 10--Other departmental items
27 Clause 10 appropriates departmental non-operating appropriations in the
form of equity injections, over which the Parliamentary Departments also exercise
control. This clause provides that the amount specified in other departmental
items for a Parliamentary Department may be applied for the departmental
expenditure of the Parliamentary Department. In short, "equity injections" can be
provided to non-corporate entities to, for example, enable investment in assets to
facilitate departmental activities.
28 Other departmental items are not expressed in terms of a particular financial
year and do not automatically lapse. Other departmental items are available until
they are spent, or the Act through which they were appropriated is repealed or
sunsets. For example, equity injection appropriations provide funding for the full
costs of acquiring new assets some of which might not be incurred until a later
financial year.
29 The Finance Minister manages the payment from other departmental items
by Parliamentary Departments 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,
except as required by law.
30 Until 30 June 2015, the Finance Minister may also manage payments
through the issuing of drawing rights in accordance with sections 26 and 27 of the
FMA Act, which continue to apply because of the PGPA (C&T) Act. Drawing
rights control who may spend from appropriations, and allow for conditions and
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 2) 2014-2015
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Notes on clauses
limits to be set by the Finance Minister (or the Finance Minister's delegate) in
relation to those payments.
Part 3--Advance to the responsible Presiding Officer
Clause 11--Advance to the responsible Presiding Officer
31 Clause 11 of the Appropriation (Parliamentary Departments) Act (No. 1)
2014-2015 (PD Act (No. 1)) enables the responsible Presiding Officer to provide
additional appropriations for items when satisfied there is an urgent need for that
expenditure, and the existing appropriation is inadequate. This additional
appropriation is referred to as the Advance to the responsible Presiding Officer
(APO). Subsections 11(3) to 11(6) of PD Act (No. 1) provide the total amounts
that can be determined under the APO provision.
32 Clause 11 of the Bill provides that irrespective of the amounts issued from
the APO before the commencement of the Bill, the amount available under
section 11 of PD Act (No. 1) will be restored to the original amounts. The
provision has been added to the Bill to ensure that there will be sufficient scope to
provide amounts from the APO for the remainder of the financial year.
33 Subclause 11(1) specifies that if the responsible Presiding Officer has
determined under subsection 11(2) of PD Act (No. 1) to increase an amount in
Schedule 1 of PD Act (No. 1) from the APO, then that amount is to be disregarded
when the Bill commences. From the date this Bill commences as an Act the total
amounts that can be determined under the APO will again be:
(a) for the Department of the Senate--$300,000;
(b) for the Department of the House of Representatives--$300,000;
(c) for the Department of Parliamentary Services--$1 million; and
(d) for the Parliamentary Budget Office--$300,000.
34 Subclause 11(2) prevents appropriations for the same expenditure from both
the APO and the Bill. Subclause 11(2) ensures that if Schedule 1 of the Bill
provides an amount for a particular expenditure and, prior to the commencement
of the Bill, the responsible Presiding Officer determines an amount from the APO
under section 11 of PD Act (No. 1) for the same expenditure (the advanced
amount), then the appropriation in the Bill will be reduced by the amount of the
advanced amount. The appropriated amount cannot be reduced below nil. For
example, if the Bill provides $20 million for a programme and an advanced
amount of $5 million is determined by the responsible Presiding Officer under
PD Act (No. 1) for a particular payment under that programme, then the amount
appropriated by the Bill, once enacted, will be reduced by $5 million (i.e.
appropriating only $15 million for the programme).
35 The responsible Presiding Officer may continue to make determinations
under subsection 11(2) of PD Act (No. 1) to add an amount from the APO to an
item of a Parliamentary Department if the criteria in subsection 11(1) of that Act
are satisfied.
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Notes on clauses
36 The Bill provides the responsible Presiding Officer for the Parliamentary
Budget Office is the President of the Senate and the Speaker of the House of
Representatives, which aligns with the process that applies to the Department of
the Parliamentary Services.
Part 4--Miscellaneous
Clause 12--Crediting amounts to special accounts
37 Clause 12 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 Parliament or another Act (sections 79 and 80). The
determination or Act that establishes the special account will specify the purposes
of the special account.
Clause 13--Appropriation of the Consolidated Revenue Fund
38 Clause 13 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 Royal Assent is
given. This clause indicates that the amounts appropriated by the Bill may be
affected by the PGPA Act and the FMA Act (as it continues to apply because of
the PGPA (C&T) Act), in particular sections 30A and 31 (see clause 6), after the
Bill receives the Royal Assent.
Clause 14--Act ceases to be in force
39 Clause 14 specifies that the Bill, once enacted, will cease to be in force at the
start of 1 July 2017. As the Appropriation Acts will sunset, there is no longer a
requirement for the reduction of appropriations during the year. As such, the
reduction sections that applied previously are no longer required (e.g. section 11
of Appropriation (Parliamentary Departments) Act (No. 2) 2013-2014) and have
been excluded from this Bill.
Schedule 1--Services for which money is appropriated
40 Schedule 1 specifies the services of the Parliamentary Departments for
which amounts will be appropriated. Schedule 1 contains a summary table which
lists the total amounts for the Parliamentary Departments and separate tables
detailing the appropriations for each Parliamentary Department.
41 Schedule 1 includes, for information purposes, the amount appropriated in
PD Act (No. 1), which is printed in italics and labelled as "Budget
Appropriation". The amount printed as the Budget Appropriation is an estimate
that does not affect the amount available at law.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 2) 2014-2015
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Notes on clauses
42 Schedule 1 also includes, for information purposes, a figure for the previous
financial year printed in light figures labelled the "Actual Available
Appropriation". That figure provides a comparison with the proposed
appropriations. It is calculated for each item by adding the amounts appropriated
in the previous year's annual Appropriation Acts, amounts adjusted under certain
provisions of the PGPA Act and FMA Act (as they continue to apply due to the
PGPA (C&T) Act) plus adjustments such as APOs. In some instances the figure
may also be affected by limits applied administratively by the Department of
Finance.
43 The Actual Available Appropriation is an estimate that does not affect the
amount available at law. For these reasons, the Actual Available Appropriation
figures may be different from the sum of amounts provided in earlier
Appropriation Acts.
44 More details about the appropriations in Schedule 1 are contained in the
portfolio statements and the second reading speech for the Bill.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 2) 2014-2015
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