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 17 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 for which the Finance Minister is responsible, 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 Department of Employment and Workplace Relations (DEWR) in Appropriation Act (No. 1) 1999-2000 be reduced by $1,087,000.
Background
On 30 May 2007, the Minister for Employment and Workplace Relations (the Minister) wrote to the Minister for Finance and Administration seeking a reduction of DEWR’s departmental items in Appropriation Act (No. 1) 1999-2000 by $1,087,000. The reasons for this reduction are as follows.
- The net result of retained funding of $1,337,000 relating to a Machinery of Government change in October 1998 offset by the recovery of $150,000 of Employer Nomination Scheme revenue incorrectly banked to the Official Public Account instead of as DEWR’s section 31 receipts; and
- The net result of $300,000 from the National Occupational Health and Safety Commission for occupational health and safety comparative performance monitoring offset by $200,000 transferred from DEWR to the Affirmative Action Agency (AAA) to implement changes to the operations of the AAA resulting from legislation changes.
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, DEWR has been consulted in the preparation of this instrument.
Overview
The Appropriation Act (No. 3) 2003-2004, enacted by the Parliament of Australia, was introduced to address the issue of excess appropriations within government departments. This Act allows the Finance Minister to make a determination reducing a departmental item for an entity upon request from the Minister responsible or the Chief Executive, where applicable. The policy objective is to manage and extinguish excess departmental appropriations that may arise due to various reasons such as reclassification of funds, efficiency savings, or the abolition of government programs. The Act ensures that any reduction in appropriation does not exceed the amount requested or the balance remaining in the Consolidated Revenue Fund. The explanatory statement provided outlines a specific instance where the Department of Employment and Workplace Relations (DEWR) sought a reduction of $1,087,000 in its departmental items due to various financial adjustments and transfers, which was subsequently approved under the legislative authority granted by the Appropriation Act.
Scope and Application
The "Determination to Reduce Appropriation Upon Request" instrument pertains to the reduction of appropriations for the Department of Employment and Workplace Relations (DEWR) under the Appropriation Act (No. 3) 2003-2004. This Act empowers the Finance Minister to make a determination that reduces a departmental item for an entity upon receiving a written request from the relevant Minister or Chief Executive, depending on the entity's responsibility. This process is intended to address instances where excess appropriations arise due to reclassifications, efficiency savings, or the abolition of government programs before the appropriations are expensed. The instrument specifically directs a reduction of $1,087,000 for DEWR's departmental items in Appropriation Act (No. 1) 1999-2000, as requested by the Minister for Employment and Workplace Relations. The reduction accounts for various factors including retained funding from a machinery of government change, the recovery of incorrectly banked Employer Nomination Scheme revenue, and offsets related to occupational health and safety monitoring and transfers to the Affirmative Action Agency. This instrument operates under the constraints that the reduction cannot exceed the amount requested by the Minister or the remaining balance of the appropriation item in the Consolidated Revenue Fund, as stipulated by subsections 10(6) and 10(7) of the Appropriation Act (No. 3) 2003-2004.
Key Provisions
The main operative sections of the Determination to Reduce Appropriation Upon Request (F2007L02088) are found under section 10 of the Appropriation Act (No. 3) 2003-2004. This section allows the Finance Minister to reduce a departmental appropriation upon receiving a written request from the responsible Minister or the Chief Executive, depending on who is responsible for the entity. The purpose of this is to address situations where there is an excess appropriation, such as when funds are reclassified, efficiency savings occur, or a program is abolished before the appropriation is expensed (subsections 10(6) and 10(7)). The determination in this instance reduces the Department of Employment and Workplace Relations (DEWR) appropriation by $1,087,000 as per the request made by the Minister for Employment and Workplace Relations on 30 May 2007.
The obligations imposed by this Act on the relevant parties include the requirement for the Minister or Chief Executive to submit a written request to the Finance Minister when an excess appropriation is identified. The Finance Minister must then review the request and issue a determination that reduces the appropriation by the amount requested or by the remaining balance in the Consolidated Revenue Fund, whichever is lesser. This process ensures that the government's financial resources are utilised efficiently and effectively, with any surplus funds being appropriately accounted for. Furthermore, the DEWR has been consulted in the preparation of this instrument, in accordance with the Legislative Instruments Act 2003, ensuring that the affected entity has had an opportunity to provide input on the proposed changes.
Failure to comply with the requirements of this Act could result in various consequences, both civil and criminal. While the specific offences, penalties, or consequences for breach are not detailed in the provided explanatory statement, it is clear that the Act aims to maintain financial integrity and accountability within the government. Breaches of the Appropriation Act (No. 3) 2003-2004 could potentially lead to legal action against the responsible parties, with penalties ranging from fines to imprisonment, depending on the severity of the breach. In addition, the affected entity may face financial repercussions, such as the need to repay any misappropriated funds or face budget cuts in subsequent years. It is essential for all parties involved to adhere to the provisions of this Act to avoid such consequences.