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2016
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION (PARLIAMENTARY DEPARTMENTS) BILL (NO. 1)
2016-2017
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance,
Senator the Honourable Mathias Cormann)
Table of Acronyms and Defined Terms
AI Act Acts Interpretation Act 1901
APO Advance to the responsible Presiding Officer
Commonwealth An entity as defined in section 10 of the PGPA Act
entity
CRF Consolidated Revenue Fund
Finance Minister Minister for Finance
GST Goods and Services Tax
non-corporate Non-corporate Commonwealth entities as defined in
entities the PGPA Act or the High Court
PGPA Act Public Governance, Performance and Accountability
Act 2013
PGPA Rule Public Governance, Performance and Accountability
Rule 2014
portfolio Portfolio Budget Statements
statements
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017
House of Representatives 1
Outline
Appropriation (Parliamentary Departments)
Bill (No. 1) 2016-2017
General Outline
1 This Explanatory Memorandum accompanies Appropriation (Parliamentary
Departments) Bill (No. 1) 2016-2017 (the Bill).
2 The main purpose of the Bill is to propose appropriations from the
Consolidated Revenue Fund (CRF) for expenditure in relation to the
Parliamentary Departments.
3 The Bill proposes appropriations broadly equivalent to 7/12ths of the
estimated 2016-2017 annual appropriations for expenditure in relation to the
Parliamentary Departments, plus Budget measures for the full year of 2016-2017.
Supply (Parliamentary Departments) Bill (No. 1) 2016-2017 appropriates the CRF
for the residual 5/12ths, less any Budget measures, with a view to ensuring that
there are adequate appropriations for the first part of 2016-2017 for the
expenditure of the Parliamentary Departments.
4 Appropriations for the ordinary annual services of the Government must be
contained in a separate Bill from other appropriations in accordance with
sections 53 and 54 of the Australian Constitution. Consequently, the Bill proposes
appropriations for the Parliamentary Departments, which are not for the ordinary
annual services of the Government. Annual appropriations that are for the
ordinary annual services of the Government are proposed in Appropriation Bill
(No. 1) 2016-2017. Other annual appropriations that are not for the ordinary
annual services of the Government are proposed in Appropriation Bill (No. 2)
2016-2017. Appropriation Bill (No. 1) 2016-2017 and Appropriation Bill (No. 2)
2016-2017 are on the same proportional basis of 2016-2017 estimates as for this
Bill. Together these three Bills are termed the Budget Appropriation Bills.
5 The Portfolio Budget Statements (portfolio statements) are published and
tabled in the Parliament in relation to the Bill. This Explanatory Memorandum
should be read in conjunction with the various 2016-2017 portfolio statements for
the Parliamentary Departments, which contain details on the appropriations set
out in Schedule 1 of the Bill. The portfolio statements are taken to cover both the
Bill and the Supply (Parliamentary Departments) Bill (No. 1) 2016-2017.
Structure of appropriations in the Bill
6 The Bill provides for the appropriation of specified amounts for expenditure
by the Parliamentary Departments.
7 Part 1 of the Bill deals with definitions, the interpretative role of the
portfolio statements and the concept of notional transactions.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017
House of Representatives 2
Outline
8 Part 2 of the Bill proposes appropriations to make payments of the amounts
in Schedule 1 for departmental items (clause 7), administered items (clause 8),
administered assets and liabilities items (clause 9) and other departmental items
(clause 10). Part 3 of the Bill specifies a way in which the amounts in Schedule 1
may be adjusted (clause 11).
9 Part 4 of the Bill deals with miscellaneous items including matters relating
to special accounts (clause 12), the appropriation of the CRF (clause 13) and
specifies when the Bill is repealed (clause 14). In addition to the adjustment
provision in Part 3, clause 13 of the Bill recognises that the appropriations in the
Bill may also be varied by the PGPA Act.
Financial Impact
10 The Bill, if enacted, would appropriate the amounts specified in Schedule 1.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017
House of Representatives 3
Statement of compatibility with human rights
Statement of compatibility with human rights
1 The Bill seeks to appropriate money for expenditure by the Parliamentary
Departments.
2 Accordingly, the Bill performs an important constitutional function, by
authorising the withdrawal of money from the CRF for the broad purposes
identified in the Bill.
3 However, as the High Court has emphasised, beyond this, Appropriation
Acts do not create rights and nor do they, importantly, impose any duties.
4 Given that the legal effect of Appropriation Bills is limited in this way, the
Bill is not seen as engaging, or otherwise affecting, the rights or freedoms relevant
to the Human Rights (Parliamentary Scrutiny) Act 2011.
5 Detailed information on the relevant appropriations, however, is contained
in the portfolio statements.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017
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Notes on clauses
Notes on clauses
Part 1--Preliminary
Clause 1--Short title
1 This clause specifies that the short title of the Bill, once enacted, will be the
Appropriation (Parliamentary Departments) Act (No. 1) 2016-2017.
Clause 2--Commencement
2 Clause 2 provides for the Bill to commence as an Act on the later of either
1 July 2016 or the day of the Royal Assent.
Clause 3--Definitions
3 Clause 3 defines the key terms used in the Bill, such as "administered item",
"departmental item" and "non-corporate entity". Each Parliamentary Department
is a non-corporate entity for the purposes of the Public Governance, Performance
and Accountability Act 2013 (PGPA Act).
Clause 4--Portfolio statements
4 Clause 4 declares that the portfolio statements are relevant documents under
paragraph 15AB(2)(g) of the Acts Interpretation Act 1901 (AI Act).
Paragraph 15AB(2)(g) provides for material to be considered in the interpretation
of an Act if the material is declared by the Act to be relevant material for the
purposes of section 15AB of the AI Act.
5 The purpose of the portfolio statements is to provide information on the
proposed allocation of resources to the outcomes of the Parliamentary
Departments. The term "portfolio statements" is defined in the Bill, at clause 3, to
mean the Portfolio Budget Statements (tabled with this Bill).
Clause 5--Notional transactions between entities that are part
of the Commonwealth
6 Clause 5 provides that notional transactions between non-corporate entities
are to be treated as if they are real transactions. Notional transactions, therefore,
require the debiting of an appropriation made by Parliament. The payments of the
amounts in Schedule 1 from one non-corporate entity to another do not require, in
a constitutional sense, an appropriation because both non-corporate entities
operate within the CRF. For reasons of financial discipline and transparency, the
practice has arisen for these payments between non-corporate entities to be treated
as though they required an appropriation, and to debit an appropriation when such
notional payments are made. This is consistent with section 76 of the PGPA Act.
7 When a non-corporate entity makes a payment, whether to another non-
corporate entity or another part of the same non-corporate entity (such as a
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017
House of Representatives 5
Notes on clauses
different "business unit" within the entity), it is to be treated as a "real" payment.
This means that the appropriation made by Parliament is extinguished by the
amount of the notional payment, even though no payment is actually made from
the CRF. Similarly, a notional receipt in such a situation is to be treated by the
receiving non-corporate entity (where relevant) as if it were a real receipt. This
does not mean every internal transfer of public money involves a notional
payment and receipt.
Part 2--Appropriation items
Clause 6--Summary of appropriations
8 Clause 6 sets out the total of the appropriations in Schedule 1 of the Bill. As
indicated, that total is broadly equivalent to 7/12ths of the estimated 2016-2017
annual appropriations that are for the expenditure of the Parliamentary
Departments, plus Budget measures for that period.
9 The amounts in Schedule 1 may be adjusted under Part 3 of the Bill. Items
may be increased by a determination under clause 11 (Advance to the responsible
Presiding Officer).
10 The amounts in Schedule 1 of the Bill may be adjusted further in accordance
with sections 74 to 75 of the PGPA Act. Specifically:
Section 74 of the PGPA Act, when read with Rule 27 of the Public
Governance, Performance and Accountability Rule 2014 (PGPA Rule),
permits non-corporate entities to retain certain types of receipts by adding
them to their most recent departmental item or other type of appropriation in
an Appropriation Act when prescribed.
Appropriations may be adjusted by amounts recoverable by a non-corporate
entity from the Australian Taxation Office for Goods and Services Tax
(GST), in accordance with section 74A of the PGPA Act. The amounts
specified in Schedule 1 exclude recoverable GST. The appropriations shown
represent the net amount that Parliament is asked to allocate to particular
purposes.
Section 74A has the effect of increasing an appropriation by the amount of
the GST qualifying amount arising from payments in respect of the
appropriation. As a result, there is sufficient appropriation for payments
under an appropriation item, provided that the amount of those payments,
less the amount of recoverable GST, can be met from the initial amount
shown against the item in Schedule 1. Section 74A also applies to notional
transactions between and within non-corporate entities.
Items may be adjusted to take into account the transfer of functions between
non-corporate entities, in accordance with section 75 of the PGPA Act. It is
possible that adjustments under section 75 may result in new items and/or
outcomes being created in an Appropriation Act.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017
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Notes on clauses
Clause 7--Departmental items
11 Clause 7 provides that the amount specified in a departmental item for a
Parliamentary Department may be applied for the departmental expenditure of the
Parliamentary Department. Clause 3 defines:
"departmental item" to be the total amount set out in Schedule 1 in relation
to a Parliamentary Department under the heading "Departmental"; and
"expenditure" to be payments for expenses, acquiring assets, making loans
or paying liabilities.
12 While the departmental items in Schedule 1 may be divided between
outcomes, the different amounts against outcomes are notional. The total
appropriation for departmental expenses represents the departmental item.
13 Departmental items involve costs over which a Parliamentary Department
has control. Departmental appropriations can be used to make any payment
related to the functions of the Parliamentary Department including on purposes
covered by other items whether or not they are in the Act for a Parliamentary
Department. Expenditure typically covered by departmental items includes
employee expenses, suppliers and other operational expenses (e.g. interest and
finance expenses).
14 Departmental items include amounts specifically to meet costs associated
with the acquisition and capitalised maintenance of existing departmental assets
valued at $10 million or less.
15 The cash to meet departmental expenses may be required at times other than
when the expenses are incurred. Departmental items are available until they are
spent, or until the Act through which they were appropriated is repealed.
Appropriation Acts have a lifespan of up to three years after which they
automatically repeal.
16 The Finance Minister manages the payment from departmental items by the
Parliamentary Departments using a discretionary power under section 51 of the
PGPA Act. Section 51 allows the Finance Minister to manage the timing and the
amount of appropriated money to be made available to a Commonwealth entity,
except as required by law.
Clause 8--Administered items
17 Subclause 8(1) provides for the appropriation of administered expense
amounts to be applied by a Parliamentary Department for the purpose of
contributing to the outcome for an administered item. An "administered item" is
defined in clause 3 to be the amounts set out in Schedule 1 opposite an outcome
for a Parliamentary Department under the heading "Administered". Administered
amounts are appropriated separately for outcomes, so, unlike departmental items,
the split across outcomes is not notional. This helps to make it clear what the
funding is intended to achieve.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017
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Notes on clauses
18 The appropriations for administered items in Schedule 1 represent the
amounts required to meet the total estimated expenses for the administered
outcomes for 2016-2017.
19 The purposes for which each administered item can be spent are further set
out in subclause 8(2). Subclause 8(2) provides that where the portfolio statements
indicate a particular activity is in respect of a particular outcome, then expenditure
on that activity is taken to be expenditure for the purpose of contributing to
achieving that outcome.
20 Administered items are those administered by a Parliamentary Department.
Specifically, administered items are tied to outcomes (departmental items are not).
21 The Finance Minister manages payments from administered items by
Parliamentary Departments using a discretionary power under section 51 of the
PGPA Act. Section 51 allows the Finance Minister to manage the timing and the
amount of appropriated money to be made available to a Commonwealth entity,
except as required by law.
Clause 9--Administered assets and liabilities items
22 Clause 9 provides amounts in Schedule 1 to acquire new administered
assets, enhance existing administered assets and/or discharge administered
liabilities relating to activities administered by the Parliamentary Departments.
Administered assets and liabilities appropriations are provided for functions
managed by a Parliamentary Department. Administered assets and liabilities items
can also be applied for any outcomes of a Parliamentary Department.
23 The Finance Minister manages payments from administered assets and
liabilities items by Parliamentary Departments using a discretionary power under
section 51 of the PGPA Act. Section 51 allows the Finance Minister to manage
the timing and the amount of appropriated money to be made available to a
Commonwealth entity, except as required by law.
Clause 10--Other departmental items
24 Clause 10 appropriates departmental non-operating appropriations in the
form of equity injections, over which the Parliamentary Departments also exercise
control. This clause provides that the amount specified in other departmental
items for a Parliamentary Department may be applied for the departmental
expenditure of the Parliamentary Department. In short, "equity injections" can be
provided to non-corporate entities to, for example, enable investment in assets to
facilitate departmental activities.
25 Other departmental items are not expressed in terms of a particular financial
year and do not automatically lapse. For example, equity injection appropriations
provide funding for the full costs of acquiring new assets some of which might not
be incurred until a later financial year. Other departmental items are available
until they are spent, or the Act through which they were appropriated is repealed.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017
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Notes on clauses
Appropriation Acts have a lifespan of up to three years after which they
automatically repeal.
26 The Finance Minister manages the payment from other departmental items
by Parliamentary Departments using a discretionary power under section 51 of the
PGPA Act. Section 51 allows the Finance Minister to manage the timing and the
amount of appropriated money to be made available to a Commonwealth entity,
except as required by law.
Part 3--Advance to the responsible Presiding Officer
Clause 11--Advance to the responsible Presiding Officer
27 Clause 11 of the Bill enables the responsible Presiding Officer to provide
additional appropriations for items when satisfied there is an urgent need for
expenditure, and the existing appropriation is inadequate. This additional
appropriation is referred to as the Advance to the responsible Presiding Officer
(APO). Subclauses 11(3) to 11(6) provide the total amounts that can be
determined under the APO provision.
28 Subclause 11(1) establishes the criteria that the responsible Presiding
Officer must be satisfied about, before determining to add an amount from the
advance to an item of a Parliamentary Department. The responsible Presiding
Officer will consider issuing an amount under subclause 11(1) if satisfied there is
an urgent need for expenditure that is not provided for, or is insufficiently
provided for, in Schedule 1 because of an omission or understatement, or because
of unforeseen circumstances. Generally, the other appropriation adjustment
options in Part 3 of the Bill or under sections 74 to 75 of the PGPA Act, must
have been exhausted before the responsible Presiding Officer will make a
determination under subclause 11(2).
29 Subclause 11(2) enables the responsible Presiding Officer to make a
determination to allocate an amount out of the advance to an item in Schedule 1,
to a new item not already in Schedule 1, or to a new outcome.
30 Subclauses 11(3) to (6) cap the amounts that can be allocated from the
advance to each of the Parliamentary Departments.
31 Supply (Parliamentary Departments) Act (No. 1) 2016-2017 provides that
the total amount that can be determined under the APO provisions in subclauses
11(3) to (6) of the Bill and the Supply (Parliamentary Departments) Act (No. 1)
2016-2017 can be no more than the cap relevant for each of the Parliamentary
Departments.
32 Subclause 11(8) provides that a determination under subclause 11(2) is a
legislative instrument, which must be tabled in Parliament, but is not subject to
disallowance or sunsetting.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017
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Notes on clauses
33 A determination under subclause 11(2) is not subject to section 42
(disallowance) of the Legislation Act 2003 as this would frustrate the purpose of
the provision, which is to provide additional appropriation for urgent expenditure.
Further, an APO is not subject to Part 4 of Chapter 3 (sunsetting) of the
Legislation Act 2003, because the amount allocated from the APO would be
extinguished when it is spent.
Part 4--Miscellaneous
Clause 12--Crediting amounts to special accounts
34 Clause 12 provides that if the purpose of an item in Schedule 1 is also the
purpose of a special account (regardless of whether the item expressly refers to the
special account), then amounts may be debited against the appropriation for that
item and credited to the special account. Special accounts may be established
under the PGPA Act by a determination of the Finance Minister (section 78) that
is disallowable by Parliament or another Act (sections 79 and 80). The
determination or Act that establishes the special account will specify the purposes
of the special account.
Clause 13--Appropriation of the Consolidated Revenue Fund
35 Clause 13 provides that the CRF is appropriated as necessary for the
purposes of the Bill. Significantly, this clause means that there is an appropriation
in law when the Act commences. That is, the appropriations are not made or
brought into existence just before they are paid, but when the Act commences.
This clause indicates that the amounts appropriated may be affected by the PGPA
Act, in particular sections 74 to 75 (see clause 6), after the Act commences.
Clause 14--Repeal of this Act
36 Clause 14 specifies that the Bill, once enacted, will repeal at the start of
1 July 2019.
Schedule 1--Services for which money is appropriated
37 Schedule 1 specifies the services of the Parliamentary Departments for
which amounts will be appropriated. Schedule 1 contains a summary table which
lists the total amounts for the Parliamentary Departments and separate tables
detailing the appropriations for each Parliamentary Department.
38 Schedule 1 includes, for information purposes, a figure for the previous
financial year printed in italics and labelled the "Actual Available Appropriation
(italic figures)--2015-2016". That figure provides a comparison with the
proposed appropriations.
39 The Actual Available Appropriation is an estimate that does not affect the
amount available at law. It is calculated for each item by adding the amounts
appropriated in the previous year's annual Appropriation Acts, amounts adjusted
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017
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Notes on clauses
under certain provisions of the PGPA Act plus adjustments such as APOs. In
some instances the figure may also be affected by limits applied administratively
by the Department of Finance.
40 For these reasons, the Actual Available Appropriation figures may be
different from the sum of amounts provided in earlier Appropriation Acts.
41 More details about the appropriations in Schedule 1 are contained in the
portfolio statements and the second reading speech for the Bill.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017
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