Appropriation Bill (No 2) 2020-2021 [2020] AUSStaCSBSD 182 (11 November 2020)

• Appropriation Bill (No. 2) 2020-2021
• Parliamentary scrutiny—section 96 grants to the states44

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Appropriation Bill (No. 2) 2020-2021

Purpose	This bill seeks to appropriate money out of the Consolidated Revenue Fund for certain expenditure
Portfolio	Finance
Introduced	House of Representatives on 6 October 2020

Parliamentary scrutiny—section 96 grants to the states^[44]

1.51 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'.

1.52 Clause 14 seeks to delegate this power to the relevant minister and, in particular, provides the minister with the power to determine:

• terms and conditions under which payments to the states, the Australian Capital Territory and the Northern Territory or a local government authority may be made;^[45] and

• the amounts and timing of those payments.^[46]

1.53 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.^[47]

1.54 The committee has commented in relation to the delegation of power in these standard provisions in previous even-numbered appropriation bills.^[48]

1.55 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.

1.56 The committee notes that important progress has been made to improve the provision of information regarding section 96 grants to the states since the 2017-18 budget, following suggestions originally made by the committee in Alert Digest 7 of 2016.^[49] These improvements include the addition of an Appendix E to Budget Paper No. 3,^[50] which provides details of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 where departments and agencies are seeking appropriations for payments to the states, territories and local governments.^[51]

1.57 The committee considers that these measures improve the ability of the Parliament to scrutinise the executive's use of the delegated power to make grants to the states and to determine terms and conditions attaching to them under section 96 of the Constitution.

1.58 The committee thanks the former minister for responding constructively to its proposals regarding the provision of additional information about the making of grants to the states under section 96 of the Constitution, and looks forward to these measures continuing for future appropriation bills.

1.59 The committee otherwise leaves to the Senate as a whole the appropriateness of clause 14 of the bill, which allows the minister to determine terms and 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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[44] Clause 14 and Schedules 1 and 2. The committee draws senators' attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv) and (v).

[45] Paragraph 16(2)(a).

[46] Paragraph 16(2)(b).

[47] Explanatory memorandum, p. 12.

[48] See 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; Eighth Report of 2016, pp. 457-460; Scrutiny Digest 3 of 2017, pp. 51-54; Scrutiny Digest 6 of 2017, pp. 7-10; Scrutiny Digest 12 of 2017, pp. 99-104; Scrutiny Digest 2 of 2018, pp. 8-11; Scrutiny Digest 6 of 2018, pp. 9-12.

[49] See Senate Standing Committee for the Scrutiny of Bills, Alert Digest 7 of 2016, pp. 7-10; and Eighth Report of 2016, pp. 457-460.

[50] Appendix E of Budget Paper No. 3, https://budget.gov.au/2020-21/content/bp3/download/bp3_19_appendix_e_online.pdf.

[51] See Department of Finance, Guide to Preparing the 2020-21 Portfolio Budget Statements, p. 32, https://www.finance.gov.au/sites/default/files/2020-10/guide-to-preparing-the-2020-21-portfolio-budget-statement.pdf.