Explanatory Statement
Appropriation Act (No. 4) 2003-2004, Section 12 – Reduction of Appropriations Upon Request
The instrument to which this explanatory statement relates
This explanatory statement relates to an instrument (the instrument) entitled “Determination to Reduce Appropriation Upon Request”, dated 28 July 2006 and numbered 1 of 2006-2007.
The legislative authority under which the instrument is made
Section 12 of Appropriation Act (No. 4) 2003-2004 enables the Finance Minister to make a determination reducing non-operating appropriations made under that Act, upon receipt of a written request from the Minister responsible or, in the case of an agency in the Finance portfolio, the Chief Executive.
The provisions were included in the Appropriation Acts to enable excess departmental appropriation items, which do not automatically lapse, to be extinguished.
Excess appropriation may arise where, for example:
- An amount is reclassified and appropriated again under another kind of appropriation;
- Efficiency savings result in a programme costing less than expected; and
- A programme under Government policy is abolished prior to the appropriation being expensed.
A determination issued by the Finance Minister pursuant to section 12 of Appropriation Act (No. 4) 2003-2004 cannot reduce an appropriation item by more than the lesser of the amount requested by the responsible Minister or Chief Executive (as appropriate), and the balance of the appropriation item remaining in the Consolidated Revenue Fund.
Purpose of the instrument
The instrument directs that equity injections for the Attorney-General’s Department in Appropriation Act (No. 2) 2000-2001 be reduced by $15,000,000.
Background
On 9 June 2006, the Attorney General wrote to the Minister for Finance and Administration seeking a reduction of the Attorney-General’s Department’s non-operating appropriation in Appropriation Act (No. 2) 2000-2001 by $15,000,000. These funds were appropriated for establishment of the proposed Administrative Review Tribunal which did not proceed.
Notes on the instrument
The instrument provides that the appropriation item in column 1 for the agency in column 2 be reduced in response to a request made by the Minister in column 4 by the amounts listed in column 6.
Overview
The Appropriation Act (No. 4) 2003-2004 was enacted to provide for the appropriation of Commonwealth revenues and the application and management of Commonwealth expenditure. This Act introduced mechanisms to allow for the reduction of appropriations in response to changes in departmental needs or circumstances, ensuring fiscal flexibility and efficiency. Section 12 of the Act specifically empowers the Finance Minister to reduce non-operating appropriations upon request from the relevant Minister or Chief Executive. This provision addresses the issue of excess appropriations that may arise due to reclassification, efficiency savings, or policy changes, ensuring that unutilised funds are returned to the Consolidated Revenue Fund. The explanatory statement for the Determination to Reduce Appropriation Upon Request, dated 28 July 2006, illustrates this process by detailing a reduction of $15,000,000 in the Attorney-General’s Department’s appropriation due to the non-establishment of the proposed Administrative Review Tribunal. The objective of this legislation is to enhance fiscal management by allowing for the dynamic adjustment of appropriations in response to changing requirements.
Scope and Application
The instrument "Determination to Reduce Appropriation Upon Request" dated 28 July 2006 is made under Section 12 of the Appropriation Act (No. 4) 2003-2004. This provision empowers the Finance Minister to reduce non-operating appropriations upon receiving a written request from the relevant Minister or Chief Executive. The act applies specifically to appropriations that do not automatically lapse, aiming to address instances where excess appropriations may arise due to reclassifications, efficiency savings, or policy changes. The instrument in question pertains to a reduction in the appropriation for the Attorney-General’s Department by $15,000,000, following a request made by the Attorney General on 9 June 2006. This reduction was necessitated by the non-establishment of the proposed Administrative Review Tribunal. The determination ensures that the appropriation reduction does not exceed the requested amount or the remaining balance in the Consolidated Revenue Fund.
Key Provisions
Section 12 of the Appropriation Act (No. 4) 2003-2004 allows the Finance Minister to make a determination to reduce non-operating appropriations when they receive a written request from the responsible Minister or, for agencies in the Finance portfolio, the Chief Executive (Section 12). This provision was introduced to address excess appropriations that do not automatically lapse, such as when funds are reclassified, efficiency savings reduce expected costs, or a government program is abolished before the appropriation is expensed. The determination cannot reduce an appropriation by more than the lesser of the requested amount or the remaining balance in the Consolidated Revenue Fund.
The obligations under this Act require the responsible Minister or Chief Executive to submit a written request to the Finance Minister if they believe an appropriation should be reduced. This request must be specific, detailing the amount and reason for the reduction. Upon receiving this request, the Finance Minister must review it and, if deemed appropriate, issue a determination to reduce the appropriation accordingly. The determination must not exceed the amount requested or the remaining balance of the appropriation.
Failure to comply with the requirements set out in this Act can lead to significant consequences. While the Act does not explicitly outline penalties for non-compliance, it is clear that the Finance Minister's determination is binding and enforceable. Breach of these obligations could result in legal challenges or administrative penalties, as the Act aims to ensure efficient use of public funds. Additionally, misuse of appropriations or failure to follow the prescribed process could lead to further scrutiny or investigation by relevant oversight bodies.