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2010-2011-2012
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION (IMPLEMENTATION OF THE REPORT OF THE
EXPERT PANEL ON ASYLUM SEEKERS) BILL (NO. 2) 2012-2013
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance and Deregulation,
Senator the Honourable Penny Wong)
Table of Acronyms and Defined Terms
AI Act Acts Interpretation Act 1901
CRF Consolidated Revenue Fund
FMA Act Financial Management and Accountability Act 1997
FMA Regulations Financial Management and Accountability
Regulations 1997
GST Goods and Services Tax
LI Act Legislative Instruments Act 2003
PB Statements Portfolio Budget Statements
Portfolio Portfolio Budget Statements and Portfolio
Statements Supplementary Estimates Statements
PSE Statements Portfolio Supplementary Estimates Statements
House of Representatives page 1 Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013
Outline
Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill
(No. 2) 2012-2013
General Outline
1 This Explanatory Memorandum accompanies Appropriation
(Implementation of the Report of the Expert Panel on Asylum Seekers) Bill
(No. 2) 2012-2013 (the Bill).
2 The main purposes of the Bill are to propose appropriations from the
Consolidated Revenue Fund (CRF) for services that are not the ordinary annual
services of the Government.
3 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 that 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 (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 1) 2012-2013.
4 This Explanatory Memorandum should be read in conjunction with the
various 2012-2013 Portfolio Statements, in particular:
· the Portfolio Supplementary Estimates Statements (PSE Statements)
which contain details of the appropriations set out in Schedule 1 of the
Bill and are published and tabled in the Parliament in relation to the Bill;
and
· the Portfolio Budget Statements (PB Statements) that were published and
tabled in the Parliament in relation to the Appropriation Bill (No. 1)
2012-2013 and Appropriation Bill (No. 2) 2012-2013.
Structure of appropriations in the Bill
5 The Bill provides for the appropriation of specified amounts for
expenditure by one Australian Government agency (being an agency under the
Financial Management and Accountability Act 1997 (FMA Act)) on activities
related to Implementation of the Report of the Expert Panel on Asylum Seekers.
House of Representatives page 2 Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013
Outline
6 Part 1 of the Bill deals with definitions, the interpretative role of the
Portfolio Statements and the concept of notional payments.
7 Part 2 of the Bill proposes appropriations to make payments of the
amounts in Schedule 1 for administered assets and liabilities items (clause 7)
and other departmental items (clause 8).
8 Part 3 of the Bill specifies the ways in which the amounts in Schedule 1
may be adjusted.
9 Part 4 deals with credits to Special Accounts (clause 10) and provides for
amounts to be appropriated as necessary (clause 11). Clause 11 of the Bill
recognises that the appropriations proposed in the Bill may also be varied by
the FMA Act.
Financial Impact
10 The Bill will appropriate the amounts specified in Schedule 1.
House of Representatives page 3 Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013
Statement of compatibility with human rights
Statement of compatibility with human rights
11 The Bill seeks to appropriate money for services that are not considered
to be the ordinary annual services of the Government.
12 The Bill does not engage any of the applicable rights or freedoms outlined
in the Human Rights (Parliamentary Scrutiny) Act 2011.
13 The Bill is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 as it does not raise any human rights issues.
House of Representatives page 4 Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013
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
Appropriation (Implementation of the Report of the Expert Panel on Asylum
Seekers) Act (No. 2) 2012-2013.
Clause 2--Commencement
2 Clause 2 provides for the Bill to commence as an Act on the day of the
Royal Assent.
Clause 3--Definitions
3 Clause 3 defines the key terms used in the Bill, such as "administered
assets and liabilities item", "Agency", "other departmental item", and "current
year". The term "Portfolio Statements" is defined in the Bill, at clause 3, to
mean the Portfolio Budget Statements and the Portfolio Supplementary
Estimates Statements.
Clause 4--Portfolio Statements
4 Clause 4 declares that the Portfolio Statements are extrinsic material
under paragraph 15AB(2)(g) of the Acts Interpretation Act 1901 (AI Act) that
may be used to ascertain the meaning of certain provisions in accordance with
subsection 15AB(1) of the AI Act. The purpose of the Portfolio Statements is to
provide information on the proposed allocation of resources to Government
outcomes by agencies within each portfolio. The Portfolio Statements provide
information to enable Parliament to understand the purpose of appropriations
proposed in the Bill.
Clause 5--Notional payments, receipts etc.
5 Clause 5 ensures that payments between agencies result in a debit from
the appropriation for the paying agency. For example, the payments of the
amounts in Schedule 1 from one FMA Act agency to another do not require, in
a constitutional sense, an appropriation, because both agencies operate within
the CRF. However, for reasons of financial discipline and transparency, the
practice has arisen for these payments between agencies to be treated as though
House of Representatives page 5 Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013
Notes on clauses
they required an appropriation, and to debit an appropriation when such
notional payments are made.
6 Clause 5 provides that notional transactions between agencies are to be
treated as if they were real transactions. Notional transactions, therefore, require
the use of a drawing right and the debiting of an appropriation made by
Parliament. When an FMA Act agency makes a payment, whether to another
FMA Act agency or another part of the same agency (such as a different
"business unit" within the agency), 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 agency (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. As explained in Regulation 19 of the Financial Management and
Accountability Regulations 1997 (FMA Regulations), some transfers of public
money from one official account to another do not involve a notional payment
or debiting an appropriation.
Part 2--Appropriation items
Clause 6--Summary of appropriations
7 Clause 6 sets out the total of the appropriations in Schedule 1 of the Bill.
Importantly, the amounts in Schedule 1 may be adjusted under a provision in
Part 3 of the Bill. In particular, Administered assets and liabilities items and
other departmental items may be reduced in accordance with clause 9.
8 The amounts in Schedule 1 of the Bill may be adjusted further in
accordance with sections 30, 30A, 31 and 32 of the FMA Act. Specifically:
· Section 30 allows an agency to re-credit, to an appropriation that had been
relied upon for an initial payment by the agency, an amount equivalent to
the repayment. The re-crediting, or reinstatement, authorised by
section 30, can result in the total amount paid from the CRF in gross
terms exceeding the amount specified in an item. Section 30 also applies
to notional transactions between and within agencies.
· Appropriations may be adjusted by amounts recovered by an agency from
the Australian Taxation Office for Goods and Services Tax (GST),
in accordance with section 30A of the FMA Act. The amounts specified
in Schedule 1 exclude recoverable GST. The appropriations shown
House of Representatives page 6 Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013
Notes on clauses
represent the net amount that Parliament is asked to allocate to particular
purposes. Section 30A 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 30A also
applies to notional transactions between and within agencies.
· Departmental items may be increased to take into account certain other
amounts received by an agency, if those receipts are prescribed by the
FMA Regulations, in accordance with section 31 of the FMA Act. For
example, FMA Regulation 15 prescribes amounts that offset costs in
relation to the activities of an agency and amounts that relate to an
employee's leave (including amounts received under the paid parental
leave scheme that was established on 1 January 2011). FMA
Regulation 15 also establishes a mechanism for agencies to hold money in
a trust or similar arrangement as departmental.
· Items may be adjusted to take into account the transfer of functions
between agencies, in accordance with section 32 of the FMA Act. It is
possible that adjustments under section 32 may result in new items and/or
outcomes being created in an Appropriation Act. It might also result in
amounts being transferred between Appropriation Acts.
Clause 7--Administered assets and liabilities items
9 Clause 7 provides amounts in Schedule 1 to acquire administered assets,
enhance existing administered assets and/or discharge administered liabilities
relating to activities administered by agencies on behalf of the Government.
Administered assets and liabilities appropriations are provided for functions
managed by an agency on behalf of the Government. Administered assets and
liabilities items can be applied for any outcomes of the agency in Schedule 1 of
the Bill, Schedule 1 to the Appropriation Act (No. 1) 2012-2013, Schedule 2 to
the Appropriation Act (No. 2) 2012-2013 or Schedule 1 to Appropriation
(Implementation of the Report of the Expert Panel on Asylum Seekers) Act
(No. 1) 2012-2013.
10 Amounts appropriated for administered assets and liabilities items can be
subject to a reduction process in accordance with clause 9 of the Bill. Under
clause 9, the Minister responsible for an agency may make a written request to
ask the Finance Minister to make a determination to reduce an item of an
House of Representatives page 7 Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013
Notes on clauses
agency. If the Finance Minister is responsible for the agency,
the Chief Executive of the agency may make the request.
11 The Finance Minister manages payments from administered assets and
liabilities items by agencies through the issuing of drawing rights,
in accordance with sections 26 and 27 of the FMA Act. Drawing rights control
who may spend money from appropriations, and they allow for conditions and
limits to be set by the Finance Minister (or the Finance Minister's delegate) in
relation to those activities.
Clause 8--Other departmental items
12 Clause 8 appropriates departmental non-operating appropriations, in the
form of equity injections, over which the agency also exercises control. This
clause provides that the amount specified in other departmental items for an
agency may be applied for the departmental expenditure of the agency. In short
"equity injections" can be provided to agencies to, for example, enable
investment in assets to facilitate departmental activities and for Designated
Collecting Institutions to purchase heritage and cultural assets.
13 Other departmental items are not expressed in terms of a particular
financial year and do not automatically lapse. Other departmental items are
available until they are spent. For example, equity injection appropriations
provide funding to meet the cost expected to be incurred in the Budget year to
acquire a new asset; however, for a number of reasons, some part of the
appropriation might not be required until a later financial year. Amounts
appropriated for other departmental items can be subject to a reduction process
in accordance with clause 9 of the Bill. Under clause 9, a written request must
be made to the Finance Minister to enable a determination to be made to reduce
an other departmental item of an agency.
14 The Finance Minister manages the payment from other departmental
items by agencies through the issuing of drawing rights in accordance with
sections 26 and 27 of the FMA Act. Drawing rights control who may spend
from appropriations, and allow for conditions and limits to be set by the
Finance Minister (or the Finance Minister's delegate) in relation to those
activities.
Part 3--Adjusting appropriation items
15 Part 3 of the Bill provides for reductions to the amounts specified in
Schedule 1. The reduction provision is contained in clause 9.
House of Representatives page 8 Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013
Notes on clauses
16 The reduction provisions were amended in the 2010-2011 Budget Bills to
introduce additional mechanisms for initiating the reduction of unspent items.
The purpose of those changes was to increase the efficiency of the reduction
process particularly when surplus appropriations result from government
decisions.
Clause 9--Reducing administered assets and liabilities items
and other departmental items
17 Clause 9 provides a process for reducing administered assets and
liabilities items and other departmental items. Generally, these items remain
available until the appropriation is spent or reduced in accordance with clause 9.
This clause enables surplus departmental item appropriation amounts to be
reduced to promote the efficient, effective, economical and ethical management
of any surplus appropriations. Agencies should only spend all of an
administered assets and liabilities item or an other departmental item if there are
government decisions to support that expenditure. Examples of where clause 9
may be appropriate to reduce an administered assets and liabilities item or an
other departmental item include:
· an excessive amount of appropriation was made in error;
· an amount is reclassified and appropriated again under another kind of
appropriation (e.g. where an amount appropriated as departmental is to be
reclassified as administered and a new administered appropriation is
provided). The existing departmental appropriation remains legally
available even though there is no Government authority to spend the
funds;
· efficiency savings result in a program costing less than expected; or
· a program is abolished under government policy before the appropriation
is expended.
18 Paragraph 9(1)(a) enables the Prime Minister, or a Minister acting on
behalf of the Prime Minister, to request the Finance Minister to reduce an
administered assets and liabilities item or an other departmental item for an
agency. Paragraph 9(1)(b) enables the Minister responsible for a particular
agency to request the Finance Minister to reduce an administered assets and
liabilities item or an other departmental item for an agency for which they are
responsible. Paragraph 9(1)(c) enables the Chief Executive of an agency for
which the Finance Minister is responsible, to request the Finance Minister to
House of Representatives page 9 Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013
Notes on clauses
reduce an administered assets and liabilities item or an other departmental item
for that agency. Subclause 9(6) assists readers by noting that a request under
subclause 9(1) is not a legislative instrument within the meaning of section 5 of
the LI Act, on the basis that it is requesting a determination to be made and it is
the determination that has substantive effect.
19 Subclause 9(2) enables the Finance Minister to make a written
determination to reduce an administered assets and liabilities item or an other
departmental item. The Finance Minister is not obliged to act on a request to
reduce excess appropriations. However, if the Finance Minister does:
· the determination must be for the amount specified in the request:
subclause 9(2);
· the determination may not reduce the item below nil: subclause 9(3); and
· the item in Schedule 1 will be taken to be reduced in accordance with the
determination of the Finance Minister: subclause 9(4).
20 Subclause 9(7) provides that a determination made under subclause 9(2)
is a legislative instrument.
21 Despite subsection 44(2) of the LI Act, which provides that instruments
made under annual Appropriation Acts are not subject to disallowance,
subclause 9(7) provides that a determination reducing an administered assets
and liabilities item or other departmental item, is subject to disallowance in
accordance with section 42 of the LI Act. Parliament retains the power to
disallow a determination to reduce a departmental item because any such
determination will reduce the amount of an appropriation authorised by
Parliament. Subclause 9(7) also confirms subsection 54(2) of the LI Act, which
provides that instruments made under annual Appropriation Acts are not subject
to sunsetting.
22 Subclause 9(5) provides that a determination made under subclause 9(2)
once made, must not be rescinded, revoked, amended or varied. Subclause 9(5)
applies despite 33(3) of the AI Act. This subclause intends to exclude the
operation of 33(3) of the AI Act from determinations made under
subclause 9(2). The purpose of subclause 9(5) is to ensure that the
appropriation, if reduced under the clause, cannot be restored by means of a
later determination.
House of Representatives page 10Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013
Notes on clauses
Part 4--Miscellaneous
Clause 10--Crediting amounts to Special Accounts
23 Clause 10 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 FMA Act by a determination of the Finance Minister
(section 20) or by another Act (section 21). The determination or Act that
establishes the Special Account will specify the purposes of the Special
Account.
Clause 11--Appropriation of the Consolidated Revenue Fund
24 Clause 11 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 Acts commence. That is, the appropriations are
not made or brought into existence just before they are paid but when the Royal
Assent is given. The words "as necessary" in this clause indicate that the
amounts appropriated may be affected by the FMA Act, in particular
sections 30, 30A and 32 (see clause 6), after the Bill receives the Royal Assent.
Schedule 1--Services for which money is appropriated
25 Schedule 1 specifies the services for which amounts will be appropriated
by the Bill. Schedule 1 contains a summary table which lists the total amounts
for each portfolio. A separate summary table is included with further detail for
the portfolio, with another table detailing the appropriation for the agency.
26 Schedule 1 includes for information purposes, a figure for the previous
financial year labelled the Actual Available Appropriation. The figure is printed
in italics under each appropriation amount to provide a comparison with the
proposed appropriations. The Actual Available Appropriation does not affect
the amounts available at law.
27 More details about the appropriations in Schedule 1 are contained in the
Portfolio Statements and the second reading speech.
House of Representatives page 11Appropriation (Implementation of the Report
of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013