Explanatory Statement
Appropriation Act (No. 1) 2005-2006, Section 9 – Reduction of Appropriations Upon Request
Appropriation Act (No. 2) 2005-2006, Section 11, 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 20 June 2006 and numbered 10 of 2005-2006.
The legislative authority under which the instrument is made
Section 9 of Appropriation Act (No. 1) 2005-2006 enables the Finance Minister to make a determination reducing departmental appropriations in 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.
Section 11 of Appropriation Act (No. 2) 2004-2005 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 and non operating 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 9 of Appropriation Act (No. 1) 2005-2006 or section 11 of Appropriation Act (No. 2) 2004-2005 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 departmental outputs for the Australian Federal Police in Appropriation Act (No.1) 2005-2006 be reduced by $165,700,000 and equity injections in Appropriation Act (No. 2) 2005-2006 be reduced by $17,000,000.
Background
On 6 June 2006, the Acting Minister for Justice and Customs wrote to the Minister for Finance and Administration seeking a reduction of the Australian Federal Police’s departmental outputs in Appropriation Act (No.1) 2005-2006 by $165,700,000 and equity injections in Appropriation Act (No.2) 2005-2006 by $17,000,000. These reductions relate to cost savings in the Enhanced Cooperation Program with Papua New Guinea and various components of the aviation security-related funding.
Notes on the instrument
The instrument provides that the appropriation items 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. 1) 2005-2006 and Appropriation Act (No. 2) 2005-2006 were enacted to address the issue of excess appropriations within the Australian government's budget, which may arise due to reclassification of funds, unexpected efficiency savings, or the cessation of a government program before the appropriation is expensed. These Acts provide mechanisms for the Finance Minister to reduce departmental and non-operating appropriations upon request from the responsible Minister or Chief Executive. The primary objective is to ensure that unutilised appropriations are properly accounted for and do not remain in the budget indefinitely. The enacting body is the Parliament of Australia, which enacts these appropriation acts to regulate the allocation and use of government funds.
Scope and Application
The Determination to Reduce Appropriation Upon Request, dated 20 June 2006, pertains to specific appropriations under the Appropriation Act (No. 1) 2005-2006 and the Appropriation Act (No. 2) 2005-2006. The instrument authorises the Finance Minister to reduce departmental appropriations and non-operating appropriations respectively, following a written request from the relevant Minister or Chief Executive. This determination applies to the Australian Federal Police, reducing their departmental outputs by $165,700,000 and equity injections by $17,000,000, reflecting cost savings from the Enhanced Cooperation Program with Papua New Guinea and related aviation security funding. The scope of the Act is limited to appropriations within the specified Acts and does not extend to other appropriations or funding mechanisms. The authority to make such reductions is restricted by the lesser of the requested amount or the balance remaining in the Consolidated Revenue Fund.
Key Provisions
The "Determination to Reduce Appropriation Upon Request" (No. 10 of 2005-2006), issued on 20 June 2006, is an instrument under sections 9 and 11 of the Appropriation Acts (No. 1 and No. 2) 2005-2006. These sections allow the Finance Minister to reduce departmental and non-operating appropriations, respectively, upon receiving a written request from the relevant Minister or Chief Executive. This legislative tool is designed to manage excess appropriations that do not automatically lapse, such as those resulting from reclassifications, efficiency savings, or policy changes that lead to the abolition of programs before their appropriations are expensed.
The primary obligation under these sections is for the Minister or Chief Executive to formally request the reduction in appropriations when an excess is identified. This request must be in writing and submitted to the Finance Minister. Once the request is received, the Finance Minister can only reduce the appropriation by the lesser of the requested amount or the balance remaining in the Consolidated Revenue Fund. This ensures that the reduction is both reasonable and within the financial means available.
Failure to comply with the requirements set forth in these sections could lead to legal consequences, though specific penalties are not outlined in the explanatory statement. However, it is important to note that the misuse of public funds or the improper administration of appropriations could potentially lead to criminal charges or civil penalties under broader financial management laws. The determination itself does not specify any penalties for non-compliance but operates within the broader framework of financial accountability and transparency in government spending.
The instrument specifically directs a reduction in the Australian Federal Police's departmental outputs by $165,700,000 and equity injections by $17,000,000, in response to a request made by the Acting Minister for Justice and Customs on 6 June 2006. These reductions are linked to cost savings from the Enhanced Cooperation Program with Papua New Guinea and various aviation security-related funding components. This example illustrates how the legislation is applied to manage and reallocate funds in response to changing operational needs or efficiencies.