Explanatory Statement
Appropriation Act (No. 1) 2004-2005, Section 9 – Reduction of Appropriations Upon Request
Appropriation Act (No. 3) 2004-2005, Section 9 – 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 29 June 2006 and numbered 14 of 2005-2006.
The legislative authority under which the instrument is made
Section 9 of Appropriation Act (No. 1) 2004-2005 and Section 9 of Appropriation Act (No. 3)
2004-2005 enables the Finance Minister to make a determination reducing departmental 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 9 of Appropriation Act (No. 1) 2004-2005 and section 9 of Appropriation Act (No. 3) 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 the reduction of departmental outputs for the Office of National Assessment in Appropriation Act (No. 1) 2004-2005 by $1,310,000 and Appropriation Act (No. 3) 2004-2005 reduced by $3,290,000.
Background
On 14 June 2006, the Prime Minister, the Hon John Howard MP, wrote to the Minister for Finance and Administration seeking a reduction of the Office of National Assessment’s departmental outputs in Appropriation Act (No. 1) 2004-2005 by $1,310,000 and Appropriation Act (No. 3)
2004-2005 by $3,290,000. This reduction relates to funds appropriated for additional staff and associated infrastructure and support functions following the Inquiry into Australian Intelligence Agencies conducted by Mr Philip Flood AO in 2005. Due to the phasing of these functions over a three year period, timing of recruitment processes in the Office of National Assessment and delays in associated infrastructure and support services, the ONA had undrawn appropriation at 30 June 2005 that is no longer required.
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 Prime Minister in column 4 by the amounts listed in column 6.
Overview
The Appropriation Act (No. 1) 2004-2005 and Appropriation Act (No. 3) 2004-2005 were enacted by the Parliament of Australia to address issues related to the management and allocation of public funds, ensuring that resources are effectively and efficiently used according to the government's budget priorities. These Acts were introduced to provide a legal framework for the appropriation of funds, including the ability to adjust appropriations in response to changing circumstances or unexpected savings. The Acts empower the Finance Minister to reduce departmental appropriations upon request from the relevant Minister or Chief Executive, aiming to prevent the accumulation of unspent funds that do not automatically lapse. This mechanism helps in optimising the use of public funds and ensuring fiscal discipline.
The Determination to Reduce Appropriation Upon Request, issued on 29 June 2006, is a practical application of these Acts, responding to a specific request by the Prime Minister to reduce the appropriation for the Office of National Assessment by $1,310,000 in Appropriation Act (No. 1) 2004-2005 and $3,290,000 in Appropriation Act (No. 3) 2004-2005. This reduction was necessitated by delays in staffing and infrastructure that rendered certain funds unneeded. The policy objective is to ensure that public funds are not wasted and are instead allocated to areas where they are most needed, reflecting the government's commitment to efficient financial management.
Scope and Application
The Determination to Reduce Appropriation Upon Request, issued under Section 9 of the Appropriation Act (No. 1) 2004-2005 and Section 9 of the Appropriation Act (No. 3) 2004-2005, applies specifically to the Office of National Assessment (ONA) and mandates a reduction of its departmental appropriations. The Act empowers the Finance Minister to reduce these appropriations upon receiving a written request from the responsible Minister or the Chief Executive of an agency within the Finance portfolio. In this instance, the request was made by the Prime Minister, the Hon John Howard MP, who sought a reduction of $1,310,000 in Appropriation Act (No. 1) 2004-2005 and $3,290,000 in Appropriation Act (No. 3) 2004-2005 for the ONA. This reduction pertains to undrawn appropriations originally allocated for additional staff and associated infrastructure and support functions, which are no longer required due to the timing of recruitment processes and delays in infrastructure and support services. The reduction cannot exceed the lesser of the requested amount or the balance of the appropriation item remaining in the Consolidated Revenue Fund.
Key Provisions
The key provisions of the Determination to Reduce Appropriation Upon Request (No. 14 of 2005-2006) are outlined in Section 9 of both the Appropriation Act (No. 1) 2004-2005 and the Appropriation Act (No. 3) 2004-2005. These sections empower the Finance Minister to reduce departmental appropriations upon receiving a written request from the responsible Minister or, in cases of agencies within the Finance portfolio, the Chief Executive. The purpose of this provision is to manage and extinguish excess departmental appropriations that do not automatically lapse, such as those resulting from reclassifications, efficiency savings, or the abolition of government programs. The determination ensures that no more than the lesser of the requested amount or the remaining balance of the appropriation item in the Consolidated Revenue Fund can be reduced.
The obligations imposed by the Act on the relevant parties include the requirement for the Minister or Chief Executive to submit a formal written request to the Finance Minister if they believe a reduction in appropriations is necessary. This request must be based on specific circumstances such as reclassifications, efficiency savings, or the cessation of a government program. The Finance Minister is then required to assess the request and issue a determination that can reduce the appropriation item by the requested amount or the remaining balance, whichever is less. The Act ensures that the process is transparent and that any reductions are justified and within the legal limits set out in the appropriation acts.
Breaches of the provisions outlined in the Appropriation Acts or the Determination to Reduce Appropriation Upon Request can lead to civil or criminal consequences. Although specific penalties are not detailed in the explanatory statement, breaches could potentially lead to legal action for unauthorized use of public funds or mismanagement of government appropriations. The consequences could include fines, restitution, or other penalties as determined by relevant courts. It is essential for all parties involved to adhere to the legal requirements to avoid such repercussions.