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APPROPRIATION BILL (NO.1) 1997-98

Bills Digest 152 1996-97
Appropriation Bill (No. 1) 1997-98

CONTENTS

• Passage History
• Purpose
• Background
• Main Provisions
• Endnotes
• Contact Officer and Copyright Details

Passage History

Appropriation Bill (No. 1) 1997-98

Date Introduced: 13 May 1997
House: House of Representatives
Portfolio: Finance
Commencement: Royal Assent

Purpose

This Bill is the major component of a three-part package of legislation authorising Government spending for the 1997-98 financial year.

Background

This Bill is the major component of a three-part package of legislation authorising Government spending for the 1997-98 financial year. The Treasurer's Budget speech was the Bill's second reading speech. The second part of the legislative package, the Appropriation Bill (No. 2) 1997-98, provides for payments to States and Territories, and spending not specifically covered by other measures. The third part, Appropriation (Parliamentary Departments) Bill 1997-98, as its name suggests, covers spending by parliamentary departments.

The Budget is based on a number of economic assumptions including the following average annual growth forecasts for 1997-98:

Real GDP:	3.75%
Employment	2%
Average Earnings	4%
CPI:	1%(1)

The economy is expected to gain momentum slightly in the next financial year, with a growth rate forecast of 3.75% compared with an estimated rate for 1996-97 of 3.25%.

The Budget forecasts that unemployment will fall from the 1996-97 estimate of 8.75% (year average) to 8.25% (year average).

The Budget papers predict an underlying deficit for 1996-97 of $6.86 billion or 1.3% of GDP, which is an improvement of $1.6 billion or 0.3% of GDP on the estimate in the Mid-Year Economic and Fiscal Outlook 1996-97 released early this year. This improvement is attributed to stronger than expected revenue collections, and lower outlays.

The underlying Budget deficit in 1997-98 is expected to fall to $3.85 billion, or 0.7% of GDP.

However, the current account deficit is expected to rise from an estimated $20 billion in 1996-97 (3.75% of GDP) to $21 billion in 1997-98 (4% of GDP).

Low inflation is expected to continue, with a CPI forecast for 1997-98 (year average) of 1%.

Revenue: Total revenue for 1997-98 is estimated to be $133 351 million, or 24.5% GDP. This is an increase of $3726 million - or 2.9% - over the previous year. The biggest increases come from:

• PAYE taxpayers, who are expected to pay an additional $4610 million to give a total of $62 050 million, an increase of 8 per cent over the previous year; and

• indirect taxes which are expected to raise an additional $1 230 million, to bring in a total of $31 120 million, an increase of 4.1%.

In contrast, revenue from the Petroleum Resources Rent Tax is expected to drop by 35.1% from $1310 million to $850 million.(2)

Outlays: Underlying outlays for 1997-98 are an estimated $137 204 million - up $723 million on last year's $136 481 million. However, the figure for 1997-98 is only 25.2% of GDP, compared to 26.6% last year(3) due to the expected growth of the economy.

Major reductions in underlying outlays are expected in the following portfolios:(4)

• Transport and Regional Development takes a cut of 19.8 per cent, from $1727 million to $1386 million. Much of that is due to the near completion of the restructuring of the Australian National Railways in the lead-up to its sale. In the 1996-97 Additional Estimates, the Government provided an extra $324.5 million to cover matters including redundancies, leave, insurance claims, workers' compensation, and outstanding contracts. This year, with most of the payouts complete, the budget allocation has dropped to $24.1 million.

• Attorney-General's budget drops 9.5% from $1235 million to $1118 million this includes a cut of $1.5 million to the Human Rights and Equal Opportunity Commission. In contrast, the Native Title Tribunal's budget was increased from $16.1 million in 1996-97 to $23.8 million in 1997-98.

• Primary Industry and Energy's budget has been reduced by 11.3% from $1786 million in 1996-97 to $1584.5 million in 1997-98.

• The Budget papers also warn of a number of fiscal risks and contingent liabilities with a possible impact of more than $20 million in one year, or $40 million over the period of the forward estimates.(5)

• These include:

• the renegotiation of the Medicare Agreements between the Commonwealth and State Governments covering hospital funding;

• the Federal Government's offer to assist States and Territories to meet any costs associated with the validation of past Acts under legislation complementing the Native Title Act 1993;

• the outcome of High Court litigation between the Federal Government and Western Mining Corporation. The Government is appealing a Federal Court decision that Western Mining should be compensated for losing its permit to explore for oil in the Timor Gap;

• legal action against the Government over past policies to separate Aboriginal children from their families in the Northern Territory;

• storing spent nuclear fuel elements. According to the Budget papers, Lucas Heights is almost full to capacity, with more than 1600 spent nuclear fuel elements in storage. Its estimated that an extra $80 million will be needed to dispose of current holdings; and

• legal action from companies quarrying sand and rock before 1 July 1995. The companies are fighting for the diesel fuel rebate through the Administrative Appeals Tribunal and the Federal Court. If successful, the Government could have to pay out between $90 and $100 million.

The Information Research Services publication Budget Review 1997-98 contains a much more detailed analysis of the Budget and its impact on particular departments and programs. It should be read in conjunction with this digest.

Main Provisions

Clause 3 authorises the Minister for Finance to issue $32 549 607 000 out of the CRF for the ordinary annual services of Government for 1997-98. The money is to be spent according to a detailed schedule annexed to the Bill. It lists the spending breakdown by department and program.

Clause 5 authorises the Minister to issue additional funds if required to cover any salary increases.

Other provisions in the Bill relate to:

• funding for bodies, such as the National Prescriber Service and the Productivity Commission, which have not yet been established. Funds for these bodies may be transferred from current programs and bodies;

• allowing the Department of Prime Minister and Cabinet to retain any money earned through selling sponsorship rights to a seminar or conference on Aboriginal reconciliation, or money raised through other means associated with such a seminar or conference. The right to retain the funds is subject to agreement between the relevant Ministers.

Endnotes

1. Budget Paper No. 1 1997–97: 2–22.

2. Ibid p 5–3.

3. ibid p 4–3.

4. Ibid p 4–3.

5. ibid pp 2–36 to 2–40.

Contact Officer and Copyright Details

Bronwyn Young
18 June 1997
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 9 July 1997

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