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Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests |
1.1 The committee comments on the following bills and, in some instances, seeks a response or further information from the relevant minister.
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Purpose
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Appropriation Bill (No. 3) 2020-2021 provides for annual appropriations
from the Consolidated Revenue Fund for certain expenditure in addition to the
appropriations provided
for by the Supply Act (No. 1) 2020-2021 and the
Appropriation Act (No. 1) 2020-2021
Appropriation Bill (No. 4) 2020-2021 provides for appropriations from the
Consolidated Revenue Fund for services that are not the ordinary annual services
of the Government
in addition to amounts appropriated through the Supply Act
(No. 2) 2020-2021 and the Appropriation Act (No. 2) 2020-2021
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Portfolio
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Finance
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Introduced
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House of Representatives on 18 February 2021
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Parliamentary scrutiny—appropriations determined by the Finance Minister[1]
1.2 Section 10 of the Appropriation Act (No. 1) 2020-21 (Appropriation Act No. 1) enables the Finance Minister to allocate additional appropriations for items when satisfied that there is an urgent need for expenditure and the existing appropriations are inadequate. The allocated amount is referred to as the Advance to the Finance Minister (AFM). The additional amounts are allocated by a determination made by the Finance Minister (an AFM determination).
1.3 AFM determinations are legislative instruments, but they are not subject to disallowance or parliamentary scrutiny by the Senate Standing Committee for the Scrutiny of Delegated Legislation. Subsection 10(2) of Appropriation Act No. 1 provides that when the Finance Minister makes such a determination the Appropriation Act has effect as if it were amended to make provision for the additional expenditure.
1.4 Subsection 10(3) caps the amounts that may be determined under the AFM provision in Appropriation Act No. 1 at $4 billion. Identical provisions appear in Appropriation Act (No. 2) 2020-21 (Appropriation Act No. 2), with a separate ($6 billion) cap in that Act. The amount available under the AFM provisions in these Acts—$10 billion—is significantly higher than that available in previous annual appropriation bills.[2] The explanatory memorandum to Appropriation Act No. 1 states that the amount of the AFM 'takes into consideration the evolving nature of the COVID-19 pandemic, allocations that have been made to date, the uncertainty around what may be required as part of the Government's response and the likely need for the Government to act quickly'.[3] The committee notes, however, that the use of the AFM provisions to allocate additional amounts is not limited on the face of the Acts to COVID-19 response measures.
1.5 The committee considers that, in allowing the Finance Minister to allocate additional funds to entities up to a total of $10 billion via non-disallowable delegated legislation, the AFM provisions in Appropriation Acts Nos. 1 and 2 delegate significant legislative power to the executive. While this does not amount to a delegation of the power to create a new appropriation, one of the core functions of the Parliament is to authorise and scrutinise proposed appropriations. High Court jurisprudence has emphasised the central role of the Parliament in this regard. In particular, while the High Court has held that an appropriation must always be for a purpose identified by the Parliament, '[i]t is for the Parliament to identify the degree of specificity with which the purpose of an appropriation is identified'.[4] The AFM provisions leave the allocation of the purpose of certain appropriations in the hands of the Finance Minister, rather than the Parliament.
1.6 Subclause 10(1) of Appropriation Bill (No. 3) 2020-2021 seeks to provide that any determinations made under the AFM provisions in Appropriation Act No. 1 are to be disregarded for the purposes of the $4 billion cap in subsection 10(3) of that Act. The note to subclause 10(1) clarifies that this means that the Finance Minister would have access to the full $4 billion for the purposes of making AFM determinations under section 10 of Appropriation Act No. 1, regardless of any amounts that have already been determined under that section. Clause 12 of Appropriation Bill (No. 4) 2020-2021 contains identical provisions, which apply to the $6 billion cap in Appropriation Act No. 2.
1.7 In 2020-21 to date, the AMF provisions have been used to allocate funding:
• for the Local Roads and Community Infrastructure Program to provide funding to local government for the delivery of road resilience and community infrastructure projects ($250 million);[5]
• to Austrade to extend the International Freight Assistance Mechanism (IFAM) to 31 December 2020 (the IFAM supports exporters of premium and perishable agricultural produce by underwriting domestic and international airfreight connectivity) ($230.1 million);[6]
• to enable Australians to be able to receive COVID-19 vaccines, once they are available ($808.8 million);[7]
• to enable the Department of Health to fund the procurement of personal protective equipment and other essential medical supplies and equipment for the National Medical Stockpile ($384.1 million);[8]
• to enable the Department of Infrastructure, Transport, Regional Development and Communications to fund payments under the Domestic Aviation Network Support program to maintain connectivity on major domestic air routes ($71.7 million);[9] and
• to enable the Department of Social Services to fund payments to not-for-profit organisations in early December 2020 in accordance with grant agreements ($159.7 million).[10]
1.8 Under clause 10 of the bill (and clause 12 of the Appropriation Bill (No. 4) 2020-2021), this amount ($1.9 billion) would be disregarded for the purposes of the $4 billion cap imposed by subsection 10(3) of Appropriation Act No. 1 and the $6 billion cap imposed by subsection 12(3) of Appropriation Act No. 2.
1.9 In light of the matters raised by the committee in relation to the Advance to the Finance Minister provisions in Appropriation Acts No. 1 and No. 2,[11] the committee draws to the attention of senators the proposal to disregard previous expenditure of $1.9 billion for the purposes of the $10 billion cap on amounts that may be determined under the Advance to the Finance Minister in 2020-21. The committee notes that the effect of this proposal is that $1.9 billion in additional funds will be available for expenditure via a non-disallowable legislative instrument.
[1] Clause 10 of Appropriation Bill (No. 3) 2020-2021 and Clause 12 of Appropriation Bill (No. 4) 2020-2021. The committee draws senators' attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv) and 24(1)(a)(v).
[2] For example, subsection 10(3) of Appropriation Act (No. 1) 2019-2020 set a cap of $295 million and subsection 12(3) Appropriation Act (No. 2) 2019-2020 set a cap of $380 million.
[3] Explanatory memorandum to Appropriation Act (No. 1) 2020-21, p. 9.
[4] Combet v Commonwealth (2005) 224 CLR 494, 577 [160]; Wilkie v Commonwealth [2017] HCA 40 (28 September 2017) [91].
[5] Advance to the Finance Minister Determination (No. 1 of 2020-2021) [F2020L00875].
[6] Advance to the Finance Minister Determination (No. 2 of 2020-2021) [F2020L01057].
[7] Advance to the Finance Minister Determination (No. 3 of 2020-2021) [F2020L01237].
[8] Advance to the Finance Minister Determination (No. 4 of 2020-2021) [F2020L01273].
[9] Advance to the Finance Minister Determination (No. 5 of 2020-2021) [F2020L01483].
[10] Advance to the Finance Minister Determination (No. 6 of 2020-2021) [F2020L01493].
[11] Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 15 of 2020, pp. 13-15.
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