Explanatory Statement
Appropriation Act (No. 3) 2003-2004, subsection 10(2) – Reduction of appropriations from prior years 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 26 June 2007 and numbered 13 of 2006-2007.
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 a departmental item for an entity upon receipt of a written request from the Minister responsible or, in the case of an entity the Finance Minister is responsible for, the Chief Executive.
The provisions were included in the Appropriation Acts to enable excess departmental appropriation items 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.
In accordance with subsections 10(6) and 10(7) of Appropriation Act (No. 3) 2003-2004, a determination issued by the Finance Minister 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 items for the Bureau of Meteorology (BOM) in Appropriation Act (No. 1) 2002-2003 be reduced by $1,493,000.
Background
On 6 June 2007, the Minister for the Environment and Water Resources (the Minister) wrote to the Minister for Finance and Administration seeking a reduction of BOM’s departmental items in Appropriation Act (No. 1) 2002-2003 by $1,493,000. This reduction relates to a net reduction in Capital Use Charge funding offset by a parameter increase.
Notes on the instrument
The instrument provides that the appropriation item in column 1 for the entity in column 2 is reduced in response to a request made by the Minister in column 4 by the amounts listed in column 6.
In accordance with the Legislative Instruments Act 2003, BOM has been consulted in the preparation of this instrument.
Overview
The Appropriation Act (No. 3) 2003-2004 was enacted to address issues arising from excess appropriations in government departments, such as reclassification of funds, efficiency savings leading to lower costs than anticipated, and the cessation of programs before their appropriations could be fully utilised. This Act empowers the Finance Minister to reduce departmental appropriations upon receiving a written request from the relevant Minister or Chief Executive, ensuring that unneeded funds are appropriately managed. The policy objective is to maintain fiscal discipline and efficiency within the government's budgetary framework. The "Determination to Reduce Appropriation Upon Request" instrument, dated 26 June 2007, was issued under the authority of section 10 of the Appropriation Act (No. 3) 2003-2004. It directed a reduction of $1,493,000 in the Bureau of Meteorology’s departmental items in Appropriation Act (No. 1) 2002-2003, following a request by the Minister for the Environment and Water Resources, reflecting a net reduction in Capital Use Charge funding offset by a parameter increase.
Scope and Application
The instrument, "Determination to Reduce Appropriation Upon Request" dated 26 June 2007, pertains to the authority provided under section 10 of the Appropriation Act (No. 3) 2003-2004, enabling the Finance Minister to reduce a departmental item for an entity upon receiving a written request from the relevant Minister or the Chief Executive of the entity. This provision was designed to address instances of excess appropriations, such as when funds are reclassified, efficiency savings result in lower than anticipated programme costs, or government policies lead to the abolition of a programme before its appropriation is expensed. The instrument specifically applies to the Bureau of Meteorology (BOM) and mandates a reduction of its departmental items in Appropriation Act (No. 1) 2002-2003 by $1,493,000, following a request by the Minister for the Environment and Water Resources. This reduction accounts for a net decrease in Capital Use Charge funding, offset by a parameter increase. The reduction cannot exceed the amount requested or the balance of the appropriation item remaining in the Consolidated Revenue Fund, as stipulated in subsections 10(6) and 10(7) of the Act. The BOM was consulted in the preparation of this instrument, in compliance with the Legislative Instruments Act 2003.
Key Provisions
The Appropriation Act (No. 3) 2003-2004, specifically subsection 10(2), allows the Finance Minister to reduce an appropriation for a government entity following a written request from the responsible Minister or, if the Finance Minister is responsible, the Chief Executive (subsection 10(2)). This provision is designed to address excess appropriations that may arise from various circumstances, such as reclassification of funds, efficiency savings, or the abolition of government programs (subsections 10(6) and 10(7)). The amount by which an appropriation can be reduced is limited to the lesser of the requested amount or the remaining balance of the appropriation in the Consolidated Revenue Fund.
Entities subject to this Act, such as the Bureau of Meteorology (BOM), must comply with the requirements set out in the legislation. The responsible Minister or Chief Executive must submit a written request to the Finance Minister for any reduction in departmental appropriations. This request must be accompanied by a detailed explanation of the reasons for the reduction, such as efficiency savings or policy changes. Additionally, the entity must ensure that any proposed reduction does not exceed the available balance of the appropriation item in the Consolidated Revenue Fund. The Act also mandates that the entity be consulted in the preparation of the instrument that implements the reduction, as seen in the case of the BOM's consultation in the creation of the Determination to Reduce Appropriation Upon Request dated 26 June 2007.
Failure to comply with the provisions of the Appropriation Act (No. 3) 2003-2004 can result in civil or criminal consequences, depending on the nature and severity of the breach. For instance, if the Finance Minister reduces an appropriation beyond the allowable limit, this could be considered an improper use of public funds, potentially leading to criminal charges. Similarly, if a Minister or Chief Executive submits a fraudulent request for a reduction, this could result in charges of fraud or misuse of office. The maximum penalties for such offences can vary but may include fines and imprisonment, depending on the specific laws breached. It is crucial for all parties involved to adhere strictly to the legislative requirements to avoid these serious consequences.