Appropriation Bill (No 4) 2016-2017 - Commentary on Ministerial and Other Responses [2017] AUSStaCSBSD 81 (22 March 2017)

• Appropriation Bill (No. 4) 2016-2017
• Parliamentary scrutiny of section 96 grants to the States 11

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Appropriation Bill (No. 4) 2016-2017

Purpose	This bill provides for additional appropriations from the Consolidated Revenue Fund for certain expenditure in addition to the appropriations provided for by the Appropriation Act (No. 2) 2016-2017 and the Supply Act (No. 2) 2016-2017.
Portfolio/Sponsor	Finance
Introduced	House of Representatives on 9 February 2017
Bill status	Before House of Representatives
Scrutiny principle	Standing Order 24(1)(a)(iv) and (v)

2.24 The committee dealt with this bill in Scrutiny Digest No. 2 of 2017. The Minister responded to the committee's comments in a letter dated 7 March 2017. Set out below are extracts from the committee's initial scrutiny of the bill and the Minister's response followed by the committee's comments on the response. A copy of the letter is at Appendix 1.

Parliamentary scrutiny of section 96 grants to the States ^[11]

Initial scrutiny – extract

2.25 Clause 14 of the bill deals with Parliament's power under section 96 of the Constitution to provide financial assistance to the States. Section 96 states that '...the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.'

2.26 Clause 14 delegates this power to the relevant Minister, and in particular, provides the Minister with the power to determine:

• conditions under which payments to the States, the Australian Capital Territory, the Northern Territory and local government may be made;^[12] and

• the amounts and timing of those payments.^[13]

2.27 Subclause 14(4) provides that determinations made under subclause 14(2) are not legislative instruments. The explanatory memorandum states that this is:

...because these determinations are not altering the appropriations approved by Parliament. Determinations under subclause 14(2) are administrative in nature and will simply determine how appropriations for State, ACT, NT and local government items will be paid.^[14]

2.28 The committee has commented in relation to the delegation of power in these standard provisions in previous even-numbered appropriation bills.^[15]

2.29 The committee takes this opportunity to reiterate that the power to make grants to the States and to determine terms and conditions attaching to them is conferred on the Parliament by section 96 of the Constitution. While the Parliament has largely delegated this power to the Executive, the committee considers that it is appropriate that the exercise of this power be subject to effective parliamentary scrutiny, particularly noting the terms of section 96 and the role of Senators in representing the people of their State or Territory. While some information in relation to grants to the States is publicly available, effective parliamentary scrutiny is difficult because the information is only available in disparate sources.

2.30 In relation to appropriations for payments to the States, Territories and local governments in the annual appropriation bills, the committee has previously requested that additional explanatory material be made available to Senators and others, including detailed information about the particular purposes for which money is sought to be appropriated. To ensure clarity and ease of use the committee has stated that this information should deal only with the proposed appropriations in the relevant bill. The committee considers this would significantly assist Senators in scrutinising payments to State, Territory and local governments by ensuring that clear explanatory information in relation to the appropriations proposed in the particular bill is readily available in one stand-alone location.

2.31 Most recently the committee considered this matter in its Eighth Report of 2016.^[16] The committee sought the Minister's advice as to:

• whether future Budget documentation (such as Budget Paper No. 3 'Federal Financial Relations') could include general information about:

• the statutory provisions across the Commonwealth statute book which delegate to the Executive the power to determine terms and conditions attaching to grants to the States; and

• the general nature of terms and conditions attached to these payments (including payments made from standing and other appropriations); and

• whether the Department of Finance is able to issue guidance advising departments and agencies to include the following information in their portfolio budget statements where they are seeking appropriations for payments to the States, Territories and local government in future appropriation bills:

• the particular purposes to which the money for payments to the States, Territories and local government will be directed (including a breakdown of proposed grants by State/Territory);

• the specific statutory or other provisions (for example in the Federal Financial Relations Act 2009, the COAG Reform Fund Act 2008, Local Government (Financial Assistance) Act 1995 or special legislation or agreements) which detail how the terms and conditions to be attached to the particular payments will be determined; and

• the nature of the terms and conditions attached to these payments.

2.32 At that time the Minister for Finance advised the committee that he would ask his department, in consultation with the Treasury, to review the current suite of Budget documentation and give consideration to including additional information on payments to the States, Territories and local government in time for the next Budget.^[17]

2.33 The committee thanks the Minister for his ongoing engagement with the committee on this matter and seeks the Minister's advice in relation to any progress that has been made in relation to including additional information on payments to the States, Territories and local government in this year's Budget documentation.

2.34 In relation to this bill, the committee draws its comments about the delegation of legislative power in clause 14 to the attention of Senators.

Minister's response

2.35 The Minister advised:

The Committee has sought my advice on any progress made in relation to the inclusion of additional information on payments to the States, Territories and local government in this year's Budget documentation.
My Department, in consultation with the Treasury, is in the process of reviewing the current suite of Budget documentation in order to give consideration to including additional information on payments to the States, Territories and local government in time this year's Budget.

Committee comment

2.36 The committee thanks the Minister for this response.

2.37 The committee welcomes the Minister’s indication that his department, in consultation with the Treasury, is in the process of reviewing the current suite of Budget documentation in order to give consideration to including additional information on payments to the States, Territories and local government in time for this year's Budget. The committee looks forward to considering the outcome of this review.

2.38 Noting the terms of section 96 of the Constitution and the role of Senators in representing the people of their State or Territory, the committee will continue to draw the issue of parliamentary scrutiny of section 96 grants to the States to the attention of Senators where appropriate in the future.

2.39 In relation to this bill, the committee draws its comments about the delegation of legislative power in clause 14 to the attention of Senators.

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[11] Clause 14 and Schedules 1 and 2.

[12] Paragraph 14(2)(a).

[13] Paragraph 14(2)(b).

[14] Explanatory memorandum, p. 11.

[15] See Senate Standing Committee for the Scrutiny of Bills, Seventh Report of 2015 (at pp 511–516), Ninth Report of 2015 (at pp 611–614) and Fifth Report of 2016 (at pp 352–357).

[16] Senate Standing Committee for the Scrutiny of Bills, Eighth Report of 2016, pp 457–460.

[17] Senate Standing Committee for the Scrutiny of Bills, Eighth Report of 2016, p. 460.