Explanatory Statement
Appropriation Act (No. 3) 2003-2004, Section 10 – Reduction of Appropriations Upon Request
Appropriation Act (No. 2) 2004-2005, 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 22 June 2006 and numbered 13 of 2005-2006.
The legislative authority under which the instrument is made
Section 10 of Appropriation Act (No. 3) 2003-2004 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 10 of Appropriation Act (No. 3) 2003-2004 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 Taxation Office in Appropriation Act (No.1) 2002-2003 be reduced by $63,091,000 and previous years’ outputs in Appropriation Act (No. 2) 2004-2005 be reduced by $1,200,000.
Background
On 14 June 2006, the Minister for Revenue and Assistant Treasurer wrote to the Minister for Finance and Administration seeking a reduction of the Australian Taxation Office’s departmental outputs in Appropriation Act (No.1) 2002-2003 by $63,091,000 and previous years’ outputs in Appropriation Act (No.2) 2004-2005 by $1,200,000.
The 2002-2003 reduction relates to the Australian Taxation Office’s 2002-2003 operating surplus ($50,000,000) and the abolition of the Agency Banking Incentive Scheme ($13,091,000).
The 2004-2005 reduction relates to unspent advertising for the Superannuation Co-contributions advertising campaign ($1,200,000).
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 "Determination to Reduce Appropriation Upon Request" instrument, dated 22 June 2006 and numbered 13 of 2005-2006, is made under sections 10 and 11 of the Appropriation Act (No. 3) 2003-2004 and the Appropriation Act (No. 2) 2004-2005 respectively. The instrument was introduced to address the problem of excess appropriations that do not automatically lapse, such as those arising from reclassification, efficiency savings, or policy changes. This legislation empowers the Finance Minister to reduce departmental and non-operating appropriations upon request from the relevant Minister or Chief Executive, ensuring fiscal responsibility by extinguishing these surplus funds. The instrument specifically directs a reduction of $63,091,000 in the Australian Taxation Office’s departmental outputs for the 2002-2003 financial year and $1,200,000 in previous years’ outputs for the 2004-2005 financial year, in response to requests made by the Minister for Revenue and Assistant Treasurer.
Scope and Application
The “Determination to Reduce Appropriation Upon Request” instrument applies to appropriations within the Australian Taxation Office, as delineated in the Appropriation Acts (No. 1) 2002-2003 and (No. 2) 2004-2005. This instrument specifically targets the reduction of appropriations in response to a written request from the relevant Minister or Chief Executive, as stipulated under sections 10 and 11 of the respective Appropriation Acts. The Finance Minister is empowered to reduce departmental appropriations in Appropriation Act (No. 3) 2003-2004 and non-operating appropriations in Appropriation Act (No. 2) 2004-2005. The instrument applies to the Commonwealth of Australia, as it concerns the reduction of appropriations for the Australian Taxation Office under the federal jurisdiction. The instrument excludes any appropriations not specifically requested or those exceeding the balance remaining in the Consolidated Revenue Fund. The scope of the instrument is further defined by the requests made, which in this case pertain to the Australian Taxation Office's operating surplus and unspent advertising funds.
Key Provisions
Section 10 of the Appropriation Act (No. 3) 2003-2004 and Section 11 of the Appropriation Act (No. 2) 2004-2005 are the main provisions under which the Finance Minister can reduce departmental and non-operating appropriations, respectively. These sections empower the Finance Minister to make a determination reducing these appropriations upon receipt of a written request from the Minister responsible for the department or the Chief Executive of an agency within the Finance portfolio. The reduction can only be up to the amount requested or the balance of the appropriation item remaining in the Consolidated Revenue Fund, whichever is lesser.
The obligations imposed by these sections are primarily on the responsible Minister or Chief Executive who must submit a written request to the Finance Minister detailing the need for a reduction in appropriations. Once a request is received, the Finance Minister must consider the request and determine an appropriate reduction, ensuring it does not exceed the requested amount or the balance of the appropriation item remaining in the Consolidated Revenue Fund. The determination must be made in good faith and in accordance with the legislative provisions.
Breaching the requirements set out in these sections can result in legal consequences. For instance, if a determination is made in bad faith or without proper consideration of the request, it could potentially lead to judicial review or other legal actions. While the Act does not explicitly state penalties for such breaches, the improper administration of appropriations could be challenged in court, leading to potential civil or administrative consequences. It is important for the Finance Minister and the responsible Ministers or Chief Executives to adhere strictly to the legislative requirements to avoid any legal repercussions.