Appropriation Bill (No 4) 2017-18 [2018] AUSStaCSBSD 29 (14 February 2018)

• Appropriation Bill (No. 4) 2017-18
• Parliamentary scrutiny of section 96 grants to the States 20

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Appropriation Bill (No. 4) 2017-18

Purpose	This bill provides for additional appropriations from the Consolidated Revenue Fund for certain expenditure in addition to the appropriations provided for by the Appropriations Act (No. 2) 2017-18
Portfolio/Sponsor	Finance
Introduced	House of representatives on 8 February 2018

Parliamentary scrutiny of section 96 grants to the States ^[20]

1.27 Clause 15 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.'

1.28 Clause 15 delegates this power to a minister or ministers specified by the bill and, in particular, provides the relevant minister or ministers may determine:

• conditions under which payments to the States, the Australian Capital Territory, the Northern Territory and local government may be made;^[21] and

• the amounts and timing of those payments.^[22]

1.29 Subclause 15(4) provides that determinations made under subclause 15(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 15(2) are administrative in nature and will simply determine how appropriations for State, ACT, NT and local government items will be paid.^[23]

1.30 The committee has commented in relation to the delegation of power in provisions of this kind in a number of previous even-numbered appropriation bills.^[24]

1.31 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.

1.32 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.

1.33 The committee comprehensively considered this matter in its Eighth Report of 2016.^[25] At that time, 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.

1.34 At the 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 consider including additional information on payments to the states, territories and local government in time for the next budget.^[26]

1.35 The committee most recently considered these matters in Scrutiny Digest No. 6 of 2017^[27] and Scrutiny Digest No. 12 of 2017,^[28] in relation to its examination of Appropriation Bill (No. 2) 2017-18. The committee welcomed the significant progress made in the 2017-18 Budget to provide additional information about section 96 grants to the States. This included the addition of an Appendix E to Budget Paper No. 3, 2017-18, which provided details of the appropriation mechanism for all payments to the States and the terms and conditions applying to them, and a new mandatory requirement for the inclusion of further information in portfolio budget statements along the lines of that suggested by the committee.

1.36 However, the committee was concerned that the implementation of this new mandatory requirement in the 2017-18 Budget had been mixed, with only one of the four departments seeking appropriations for payments to the States fully implementing the mandatory information requirement. The committee requested that the minister draw the new information requirements to the attention of those departments that had not yet included the additional information in their budget documentation. The committee also requested the minister's advice as to the provision of additional general information concerning section 96 grants to the states in Budget Paper 3 in the next Budget (2018-19).

1.37 In response, the minister advised that the relevant departments had included the requested additional information on their websites, and that the mandatory information requirements would be met in the future. The minister also advised that his department would liaise with the Department of Treasury regarding the provision of additional information in Budget Paper No. 3 for the 2018-19 Budget.

1.38 The committee welcomes the significant progress that has been made to provide additional information about section 96 grants to the States in Budget documentation. The committee looks forward to considering the outcome of the consultation between the Department of Finance and the Department of the Treasury regarding the provision of further general information at the time of the next Budget.

1.39 In relation to this bill, the committee leaves to the Senate as a whole the appropriateness of the proposed delegation of legislative power in clause 15 which allows the minister to determine conditions under which payments to the States, Territories and local government may be made and the amounts and timing of those payments.

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[20] Clause 15. The committee draws senators' attention to this provision pursuant to Senate Standing Order 24(1)(a)(v).

[21] Paragraph 15(2)(a).

[22] Paragraph 15(2)(b).

[23] Explanatory memorandum, p. 11.

[24] Senate Standing Committee for the Scrutiny of Bills, Seventh Report of 2015, pp. 511–516; Ninth Report of 2015, pp. 611–614; Fifth Report of 2016, pp. 352–357; Scrutiny Digest 2 of 2017, pp. 6-8; Scrutiny Digest 3 of 2017, pp. 51-54; Scrutiny Digest No. 6 of 2017, pp. 7-11; and Scrutiny Digest No. 12 of 2017, pp 99-107.

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

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

[27] Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest No. 6 of 2017, pp. 7-11.

[28] Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest No. 12 of 2017, pp 99-107.