Explanatory Statement
Appropriation Act (No. 3) 2003-2004, Section 10 - Reduction of Appropriations Upon Request
Appropriation Act (No. 1) 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 16 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 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.
Section 9 of Appropriation Act (No. 1) 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 10 of Appropriation Act (No. 3) 2003-2004 or section 9 of Appropriation Act (No.1) 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 Department of Defence in Appropriation Act (No. 1) 2001-2002 be reduced by $114,441,000; Appropriation Act (No. 1) 2002-2003 be reduced by $37,000; Appropriation Act (No. 1) 2003-2004 be reduced by $12,014,000; and Appropriation Act (No. 1) 2004-2005 be reduced by $123,962,000.
Background
On 15 September 2005, the Minister for Defence, Senator the Hon Robert Hill, wrote to the Minister for Finance and Administration seeking a reduction of the Department of Defence departmental outputs in Appropriation Act (No. 1) 2001-2002 by $114,441,000; Appropriation Act (No. 1) 2002-2003 by $37,000; Appropriation Act (No. 1) 2003-2004 by $12,014,000; and Appropriation Act (No. 1) 2004-2005 by $123,962,000.
These amounts have arisen from a variety of sources, namely 2001-2002 funding no longer required for the Military Compensation Scheme, which has been administered by the Department of Veteran Affairs from 1 July 2004; excess foreign exchange rate supplementation over several years, underspending on Project Pitchpipe; and excess funding relating to Defence Housing Authority competitive neutrality and land tax supplementation arrangements.
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.