Appropriation Bill (No. 3) 2024-2025 Appropriation Bill (No. 4) 2024-2025 - Initial Scrutiny [2025] AUSStaCSBSD 20 (13 February 2025)

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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Appropriation Bill (No. 3) 2024-2025
Appropriation Bill (No. 4) 2024-2025^[1]

Purpose	The Appropriation Bill (No. 3) 2024-2025 seeks to appropriate additional money out of the Consolidated Revenue Fund for the ordinary annual services of the government. The Appropriation Bill (No. 4) 2024-2025 seeks to appropriate additional money out of the Consolidated Revenue Fund for services that are not the ordinary annual services of the government.
Portfolio	Finance
Introduced	House of Representatives on 4 February 2025
Bill status	Before the Senate

Parliamentary scrutiny—ordinary annual services of the government^[2]

1.2 Under section 53 of the Constitution the Senate cannot amend proposed laws appropriating revenue or moneys for the ordinary annual services of the government. Further, section 54 of the Constitution provides that any proposed law which appropriates revenue or moneys for the ordinary annual services of the government shall be limited to dealing only with such appropriation.

1.3 Appropriation Bill (No. 3) 2024-2025 (Appropriation Bill No. 3) seeks to appropriate money from the Consolidated Revenue Fund for the ordinary annual services of the government. However, it is unclear to the committee if all of the initial expenditure in relation to certain measures have been appropriately classified as ordinary annual services.

1.4 The inappropriate classification of items in appropriation bills as ordinary annual services, when they in fact relate to new programs or projects, undermines the Senate’s constitutional right to amend proposed laws appropriating revenue or moneys for expenditure on all matters not involving the ordinary annual services of the government. This is relevant to the committee’s role in reporting on whether the exercise of legislative power is subject to sufficient parliamentary scrutiny.^[3]

1.5 The Senate Standing Committee on Appropriations, Staffing and Security^[4] has also actively considered the inappropriate classification of items as ordinary annual services of the government.^[5] It has noted that the division of items in appropriation bills since the adoption of accrual budgeting has been based on a mistaken assumption that any expenditure falling within an existing departmental outcome should be classified as ordinary annual services expenditure.^[6]

1.6 As a result of continuing concerns relating to the misallocation of some items, on 22 June 2010 the Senate resolved:

1) To reaffirm its constitutional right to amend proposed laws appropriating revenue or moneys for expenditure on all matters not involving the ordinary annual services of the Government; [and]

are not appropriations for the ordinary annual services of the Government and that proposed laws for the appropriation of revenue or moneys for expenditure on the said matters shall be presented to the Senate in a separate appropriation bill subject to amendment by the Senate.

1.7 The committee concurs with the view expressed by the Appropriations, Staffing and Security Committee that if ‘ordinary annual services of the government’ is to include items that fall within existing departmental outcomes then:

completely new programs and projects may be started up using money appropriated for the ordinary annual services of the government, and the Senate [may be] unable to distinguish between normal ongoing activities of government and new programs and projects or to identify the expenditure on each of those areas.^[7]

1.8 The Appropriations, Staffing and Security Committee considered that the solution to any inappropriate classification of items is to ensure that new policies for which money has not been appropriated in previous years are separately identified in their first year in the bill that is not for the ordinary annual services of the government.^[8]

1.9 Despite these comments, and the Senate resolution of 22 June 2010, it appears that a reliance on existing broad ‘departmental outcomes’ to categorise appropriations, rather than on an individual assessment as to whether a particular appropriation relates to a new program or project, continues. The committee notes that in recent years the Senate has routinely agreed to annual appropriation bills containing such broadly categorised appropriations, despite the potential that expenditure within the broadly-framed departmental outcomes may have been inappropriately classified as ‘ordinary annual services’.^[9] It appears likely that there may be measures in this bill that have been inappropriately classified as ‘ordinary annual services’, which would thereby impact on the Senate’s ability to subject the measures to an appropriate level of parliamentary scrutiny

1.10 The committee has previously written to Ministers for Finance in relation to inappropriate classification of items in other appropriation bills on a number of occasions;^[10] however, the government has consistently advised that it does not intend to reconsider its approach to the classification of items that constitute the ordinary annual services of the government.

1.11 The committee again notes that the government’s approach to the classification of items that constitute ordinary annual services of the government is not consistent with the Senate resolution of 22 June 2010.

1.12 The committee draws to the Senate’s attention that it appears likely that the initial expenditure of some items in Appropriation Bill (No. 3) 2024-2025 may have been inappropriately classified as ordinary annual services.

1.13 The committee reiterates its consistent position that any inappropriate classification of items in appropriation bills undermines the Senate’s constitutional right to amend proposed laws appropriating revenue or moneys for expenditure on all matters not involving the ordinary annual services of the government. The inappropriate classification of items impacts on the Senate’s ability to effectively scrutinise proposed appropriations as the Senate may be unable to distinguish between normal ongoing activities of government and new programs or projects.

Parliamentary scrutiny—appropriations determined by the Finance Minister^[11]

1.14 Section 10 of Appropriation Act (No. 1) 2024-2025 (Appropriation Act No. 1) enables the Finance Minister to allocate additional funds to entities 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). AFM determinations are legislative instruments, but they are not subject to disallowance.

1.15 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. Subsection 10(3) caps the amounts that may be determined under the AFM provision in Appropriation Act No. 1 at $400 million. Identical provisions appear in Appropriation Act (No. 2) 2024-2025 (Appropriation Act No. 2), with a separate $600 million cap in that Act.^[12]

1.16 Subclause 10(1) of Appropriation Bill (No. 3) 2024-2025 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 $400 million cap. The note to subclause 10(1) clarifies that this means that the Finance Minister would have access to the full $400 million 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) 2024-2025 contains identical provisions, which apply to the $600 million cap in Appropriation Act No. 2.

1.17 While it does not appear any AFM determinations have been made since Appropriation Acts No 1 and 2 commenced, and as such the provisions are unlikely to have a substantive effect on the total amount of funds that may be allocated by the Finance Minister under the advances over 2024-25, this does not alleviate the committee’s fundamental concerns with the AFM mechanism.

1.18 The committee considers that, in allowing the Finance Minister to allocate additional funds to entities via non-disallowable delegated legislation, in this case up to a total of $1 billion, 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, the committee notes that 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’.^[13] The AFM provisions leave the allocation of the purpose of certain appropriations in the hands of the Finance Minister, rather than the Parliament.

1.19 The committee’s significant scrutiny concerns in relation to these provisions are heightened given that AFM determinations are not subject to the usual parliamentary disallowance process. In this regard, the committee notes that neither of the explanatory memoranda to Appropriation bills Nos 3 and 4 note that the AFM provisions are exempt from disallowance. The explanatory memorandum to the bill for Appropriation Act No. 1 however suggests that disallowing an AFM determination:

...would frustrate the purpose of the provision, which is to provide additional appropriation for urgent expenditure.

Disallowance of an AFM determination would reduce an entity’s appropriation to its original level. Yet the urgent expenditure it had already undertaken validly prior to disallowance, in reliance upon the determination, would count towards the newly reduced appropriation...

Accordingly, disallowance would leave the entity with a shortfall in the appropriation available to fund the ongoing expenditure for which the Government originally budgeted and which the Parliament approved when it passed the Appropriation Act.^[14]

1.20 While noting this explanation, the committee is of the view that disallowance is the primary means by which the Parliament exercises control over the legislative power that it has delegated to the executive. Exempting an instrument from disallowance therefore has significant implications for parliamentary scrutiny. In June 2021, the Senate acknowledged these implications and resolved that delegated legislation should be subject to disallowance unless there are exceptional circumstances, and any claim that circumstances justify such an exemption will be subject to rigorous scrutiny, with the expectation that the claim will only be justified in rare cases.^[15]

1.21 The committee concurs with the view expressed by the Senate Standing Committee for the Scrutiny of Delegated Legislation in relation to the disallowance status of AFM determinations. In particular, the committee agrees that if the AFM is used for a genuine emergency situation, the likelihood of a determination subsequently being disallowed would be virtually non-existent. This explanation therefore is insufficient, from a scrutiny perspective, to justify an exemption from disallowance. Instead, the potential for disallowance would simply operate to ensure that the AFM is only utilised in genuinely urgent circumstances, as intended by the Parliament.^[16]

1.22 The committee reiterates its long-standing scrutiny concerns in relation to the Advance to the Finance Minister provisions contained in the annual Appropriation Acts, which allow the Finance Minister to determine the purposes for which additional funds may be allocated in legislative instruments that are not subject to disallowance.

1.23 However, in light of the fact that these bills do not appear to have a substantive effect on the total amount of funds that may be allocated by the Finance Minister over 2024-25, the committee makes no further comment on this matter on this occasion.

Parliamentary scrutiny—measures marked as ‘not for publication’^[17]

1.24 Clause 4 of both Appropriation Bill (No. 3) 2024-2025 and Appropriation Bill (No. 4) 2024-2025 provide that portfolio statements (in this case known as Portfolio Additional Estimates Statements – or PAES) are relevant documents for the purposes of section 15AB of the Acts Interpretation Act 1901. That is, clause 4 provides that the PAES may be considered in interpreting the provisions of each bill. Moreover, the explanatory memoranda to the bills state that they should be read in conjunction with the PAES.^[18]

1.25 Noting the important role of the PAES in interpreting Appropriation Bills Nos 3 and 4, the committee expresses its scrutiny concerns in relation to the inclusion of measures within the PAES that are earmarked as ‘not for publication’ (nfp), meaning that the proposed allocation of funding to those budget measures is not published within the PAES. Various reasons are provided for marking a measure as nfp, including that aspects of the relevant program are legally or commercially sensitive.

1.26 Parliament has a fundamental constitutional role to scrutinise and authorise the appropriation of public money. As outlined by the High Court, the appropriation process is intended to ‘give expression to the foundational principle of representative and responsible government that “no money can be taken out of the consolidated Fund into which the revenues of the State have been paid, excepting under a distinct authorisation from Parliament itself”’.^[19] Given the importance of parliamentary scrutiny over the appropriation process, the committee considers that the default position should be to publish the full amount of funding allocated to each Budget measure. However, where it is considered to be necessary and appropriate not to publish the total funding amount for a measure, the committee considers that an explanation should be included within the PAES, noting that the onus is on those claiming confidentiality in relation to the provision of information to the Parliament to argue the case for it. The committee therefore has significant scrutiny concerns in relation to the inclusion of measures within the PAES that are earmarked as nfp where there is either no, or very limited, explanation as to why it is appropriate to mark the measure as nfp.

1.27 In Scrutiny Digest 16 of 2021, the committee requested that future Department of Finance guides on preparing portfolio budget statements be updated to include guidance that, where a measure is marked as nfp, a high-level explanation should at least be included within the portfolio budget statements explaining why this is appropriate.^[20] As a result, the Department of Finance updated the Guide to Preparing the Portfolio Budget Statements to reflect the committee’s scrutiny concerns.^[21] The committee notes that the most recent Department of Finance Guide to preparing the 2024-25 Portfolio Additional Estimates Statements also includes similar advice.^[22]

1.28 The committee takes this opportunity to again welcome the inclusion of this advice in the Department’s guides. However, the committee notes that despite the inclusion of this advice it nevertheless continues to have scrutiny concerns in relation to the lack of detail in the explanations provided in the PAES. For example, a number of explanations for measures marked as nfp within the 2024-25 PAES merely state that the funding for a measure is not for publication due to commercial sensitivities.

1.29 The committee notes that the very high-level nature of these explanations makes it difficult to assess whether several of the measures categorised as nfp within the PAES are appropriately categorised as such. More detailed explanations as to why it is appropriate to mark a budget measure as nfp would allow for a greater level of parliamentary scrutiny over these explanations. For example, it is unclear to the committee why it is appropriate not to publish total amounts in relation to the decommissioning of the Northern Endeavour floating oil production storage and offtake facility, as it is not explained why the provision of any financial information is considered to be commercially sensitive.^[23]

1.30 To this end, the committee notes that the mere existence of a commercial element in relation to a Budget measure is not sufficient, of itself, to justify the non‑publication of any of the funding amount for that measure. The lack of detailed explanation makes it difficult for the Parliament and others to interrogate the rationale behind this classification of a measure as nfp. The committee considers that an explanation as to why a measure is marked as nfp, beyond simply stating that commercial elements apply, should be included within the budget documents and that this would not compromise commercial sensitivities.

1.31 The committee is therefore of the view that if it is decided that the financial details of a measure should not be published for public interest reasons, as much detail should be provided in the portfolio budget or additional estimates statement as is necessary to substantiate that decision. For instance, where a claim of commercial confidentiality or sensitivities is to be raised, it would be of assistance to the committee and to the Parliament for detail to be provided of how the publication of the financial details of the measure could ‘damage the commercial interests of a commercial trader in the market place, including the Commonwealth’.^[24]

1.32 In considering the necessary extent of any such explanation, departments should be mindful of the Parliament’s fundamental role in scrutinising the appropriation of money from the Consolidated Revenue Fund and the need to keep to a minimum the number of instances in which the full financial details of a measure are not published.

1.33 The committee draws to the Senate’s attention the committee’s consistent scrutiny concern that the Parliament is being asked to authorise appropriations without clear information about all of the amounts that are to be appropriated under each individual budget measure.

Parliamentary scrutiny—section 96 grants to the states^[25]

1.34 Clause 14 of Appropriation Bill (No. 4) 2024-2025 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’.

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

1.36 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 the Parliament. Determinations under subclause 14(2) are administrative in nature and will simply determine how payments to or for a State, ACT, NT or a local government authority will be made.^[28]

1.37 The committee has commented in relation to the delegation of power in these standard provisions in previous even-numbered appropriation bills.^[29]

1.38 The committee takes this opportunity to reiterate that the power to make grants to the states and to determine the 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. ‑

1.39 The committee notes, and welcomes, 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.^[30] These improvements include: the addition of an Appendix E to Budget Paper No. 3, which provides details of the appropriation mechanism for all payments to the states and the terms and conditions applying to them; and a mandatory requirement for the inclusion of further information in PAES where departments and agencies are seeking appropriations for payments to the states, territories and local governments.^[31]

1.40 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.

1.41 Nevertheless, the committee notes that while these measures improve transparency to some degree, the committee remains concerned about the broad discretion provided to ministers to determine terms and conditions for grants to the states and territories. The committee also notes that the Parliament’s ability to scrutinise the terms and conditions of these grants varies depending on the appropriation mechanism used for the payments.

1.42 The committee leaves to the Senate as a whole the appropriateness of clause 14 of Appropriation Bill (No. 4) 2024-2025, which allows ministers 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.

^[2] Appropriation Bill (No. 3) 2024-2025, various provisions. The committee draws senators’ attention to these provisions pursuant to Senate standing order 24(1)(a)(v).

^[5] Senate Standing Committee on Appropriations and Staffing, 50th Report: Ordinary annual services of the government, 2010, p. 3; and annual reports of the committee from 2010-11 to 2014-15.

^[6] Senate Standing Committee on Appropriations and Staffing, 45^th Report: Department of the Senate’s Budget; Ordinary annual Services of the government; and Parliamentary computer network, 2008, p. 2.

^[7] Senate Standing Committee on Appropriations and Staffing, 45th Report: Department of the Senate’s Budget; Ordinary annual Services of the government; and Parliamentary computer network, 2008, p. 2.

^[8] Senate Standing Committee on Appropriations and Staffing, 45th Report: Department of the Senate’s Budget; Ordinary annual Services of the government; and Parliamentary computer network, 2008, p. 2.

^[9] See, for example, debate in the Senate in relation to amendments proposed by Senator Leyonhjelm to Appropriation Bill (No. 3) 2017-18, Senate Hansard, 19 March 2018,

^[10] Senate Standing Committee for the Scrutiny of Bills, Tenth Report of 2014, pp. 402–406; Fourth Report of 2015, pp. 267–271; Alert Digest No. 6 of 2015, pp. 6–9; Fourth Report of 2016, pp. 249–255; Alert Digest No. 7 of 2016, pp. 1–9; Scrutiny Digest 2 of 2017, pp. 1–5; Scrutiny Digest 6 of 2017, pp. 1–6; Scrutiny Digest 12 of 2017, pp. 89–95; Scrutiny Digest 2 of 2018, pp. 1–7; Scrutiny Digest 2 of 2019, pp. 1–4, Scrutiny Digest 3 of 2020, pp. 1–4, Scrutiny Digest 15 of 2020, pp. 10–13, Scrutiny Digest 8 of 2021, pp. 5–8, Scrutiny Digest 2 of 2022, pp. 12–15; Scrutiny Digest 7 of 2022, pp. 10-21; Scrutiny Digest 1 of 2023, pp. 78–80; Scrutiny Digest 6 of 2023, pp. 2‑–‑5; Scrutiny Digest 3 of 2024, pp. 8-11.

^[11] Appropriation Bill (No. 3) 2024-2025, clause 10; Appropriation Bill (No. 4) 2024‑2025, clause 12. The committee draws senators’ attention to these provisions pursuant to Senate standing orders 24(1)(a)(iv) and (v).

^[15] Senate resolution 53B. See Journals of the Senate, No. 101, 16 June 2021, pp. 3581–3582.

^[16] Senate Standing Committee for the Scrutiny of Delegated Legislation, Delegated Legislation Monitor 1 of 2022 (25 January 2022) pp. 4–6.

^[17] Appropriation Bill (No. 3) 2024-2025, clause 4; Appropriation Bill (No. 4) 2024‑2025, clause 4. The committee draws senators’ attention to these provisions pursuant to Senate standing order 24(1)(a)(v).

^[20] Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 16 of 2021 (21 October 2021) pp. 47–51.

^[21] See comments on Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 2 of 2022 (18 March 2022) pp. 19–21.

^[22] Department of Finance, Guide to preparing the 2024-25 Portfolio Additional Estimates Statements, p. 34.

^[23] Mid-Year Economic and Fiscal Outlook 2024–25, pp. 279-280; Department of Industry, Science and Resources, Portfolio Additional Estimates Statements 2024-25, p. 33.

^[24] Harry Evans and Rosemary Laing, eds, Odgers’ Australian Senate Practice, 14th edition, Department of the Senate, 2016, p. 664.

^[25] Appropriation Bill (No. 4) 2024-2025, clause 14 and Schedules 1 and 2. The committee draws senators’ attention to these provisions pursuant to Senate standing orders 24(1)(a)(iv) and (v).

^[29] 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; Scrutiny Digest 4 of 2019, pp. 9–12; Scrutiny Digest 15 of 2020, pp. 16–17; Scrutiny Digest 8 of 2021, pp. 13–14; Scrutiny Digest 2 of 2022, pp. 21–22; Scrutiny Digest 7 of 2022, pp. 20–21; Scrutiny Digest 6 of 2023, pp. 11–12; Scrutiny Digest 7 of 2024, pp. 12–14.

^[30] 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.

^[31] Department of Finance, Guide to preparing the 2024-25 Portfolio Additional Estimates Statements, p. 29.

Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests