Explanatory Statement
Appropriation Act (No. 2) 2004-2005, Section 11 - Reduction of Appropriations Upon Request
Appropriation Act (No. 4) 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 29 June 2006 and numbered 19 of 2005-2006.
The legislative authority under which the instrument is made
Section 11 of Appropriation Act (No. 2) 2004-2005 and Section 11 of Appropriation Act (No.4) 2004-2005 enable the Finance Minister to make a determination reducing non-operating appropriations in these Acts, 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 Finance Chief Executive gave written authorisation on 7 December 2005 to the Chief Financial Officer of the department to request written determinations from the Finance Minister to reduce appropriations for Finance under section 11 of Appropriation Act (No. 2) 2004-2005 and section 11 of Appropriation Act (No. 4) 2004-2005.
The provisions were included in the Appropriation Acts to enable excess 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 11 of Appropriation Act (No. 2) 2004-2005 and Section 11 of Appropriation Act (No.4) 2004-2005 cannot reduce an appropriation item by more than the lesser of the amount requested by the responsible Minister, Chief Executive or Officer (as appropriate), and the balance of the appropriation item remaining in the Consolidated Revenue Fund.
Purpose of the instrument
The instrument directs that equity injection for the Department of Finance and Administration (DOFA) in Appropriation Act (No. 2) 2004-2005 be reduced by $27,600,000, administered assets and liabilities in Appropriation Act (No.2) 2004-2005 be reduced by $310,000 and administered assets and liabilities in Appropriation Act (No.4) 2004-2005 be reduced by $190,000.
Background
On 23 May 2006, the Chief Financial Officer of the Department of Finance and Administration, Mr Dominic Staun, wrote to the Minister for Finance and Administration seeking a reduction of the Department of Finance and Administration’s equity injections in Appropriation Act (No. 1)
2004-2005 by $27,600,000. On the 21 June 2006 Mr Staun wrote again, to the Minister for Finance and Administration requesting a reduction of the Department of Finance and Administration’s administered assets in Appropriation Act (No.2) 2004-2005 by $310,000 and administered assets in Appropriation Act (No.4) 2004-2005 by $190,000. These reductions relate to funds that have been re-appropriated to Finance for the Anzac Park East and West project ($27,600,000); cost savings in relation to superannuation payments to former state railway employees ($310,000); and the reclassification and re-appropriation of funding for the National Portrait Gallery ($190,000).
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 Officer in column 4, by the amount listed in column 6.
Overview
The "Determination to Reduce Appropriation Upon Request" was enacted in 2006 to address issues arising from excess non-operating appropriations that do not automatically lapse. This instrument was introduced under the Appropriation Act (No. 2) 2004-2005 and the Appropriation Act (No. 4) 2005-2006, empowering the Finance Minister to reduce non-operating appropriations upon receiving a written request from the relevant Minister, Chief Executive, or Officer. The primary objective of this legislation is to ensure that any excess appropriations, which may result from reclassifications, efficiency savings, or the abolition of programs, are properly managed and extinguished. The instrument was authorised by the Finance Chief Executive and issued by the Chief Financial Officer of the Department of Finance and Administration, reducing specific appropriation items for equity injections, administered assets, and liabilities by specified amounts, reflecting re-appropriations and savings.
Scope and Application
The "Determination to Reduce Appropriation Upon Request" is an instrument that pertains to the reduction of non-operating appropriations under the Appropriation Act (No. 2) 2004-2005 and Appropriation Act (No. 4) 2004-2005. The determination is made by the Finance Minister upon written request from the Minister responsible for the department or, in the case of an agency in the Finance portfolio, the Chief Executive. The authority for this determination is provided under Section 11 of the respective Appropriation Acts, which enables the extinguishment of excess non-operating appropriation items that do not automatically lapse. The scope of the instrument applies to the Department of Finance and Administration, focusing on specific appropriation items such as equity injections and administered assets and liabilities. The instrument directs a reduction of $27,600,000 in equity injections, $310,000 in administered assets and liabilities in Appropriation Act (No. 2) 2004-2005, and $190,000 in administered assets and liabilities in Appropriation Act (No. 4) 2004-2005. The reductions are a result of funds re-appropriated to Finance for specific projects and cost savings. The instrument cannot reduce an appropriation item by more than the lesser of the amount requested by the responsible Minister, Chief Executive or Officer, and the balance of the appropriation item remaining in the Consolidated Revenue Fund.
Key Provisions
The primary operative sections relevant to this legislation are Section 11 of Appropriation Act (No. 2) 2004-2005 and Section 11 of Appropriation Act (No. 4) 2004-2005. These sections empower the Finance Minister to issue a determination that reduces non-operating appropriations within the specified Acts upon receiving a written request from the relevant Minister, Chief Executive, or Officer. This mechanism is intended to address situations where excess appropriations remain unspent due to various factors such as reclassification, efficiency savings, or the abolition of government programs before the appropriations are expensed.
The obligations and requirements imposed by these sections necessitate that any written request for the reduction of appropriations must be made by the appropriate authority, such as the responsible Minister, Chief Executive, or Officer, depending on the entity involved. The Finance Minister is then required to issue a determination that aligns with the request, ensuring that the reduction does not exceed the lesser of the requested amount and the balance of the appropriation item remaining in the Consolidated Revenue Fund. This process ensures that the reductions are both justified and within the legal limits set by the Acts.
In the context of the Determination to Reduce Appropriation Upon Request dated 29 June 2006, the Finance Minister has directed specific reductions in appropriations for the Department of Finance and Administration. These reductions include a decrease in equity injection by $27,600,000, a reduction in administered assets and liabilities by $310,000 in Appropriation Act (No. 2) 2004-2005, and another reduction in administered assets and liabilities by $190,000 in Appropriation Act (No. 4) 2004-2005. Such reductions were prompted by re-appropriations to the Anzac Park East and West project, cost savings on superannuation payments, and reclassification of funding for the National Portrait Gallery.
Failure to comply with the requirements set out in these sections could lead to various civil or administrative consequences, though the explanatory statement does not detail specific penalties. However, it is clear that any unauthorised reduction of appropriations could result in legal challenges or financial discrepancies, given the importance of adherence to budgetary laws. The statutory framework ensures that appropriations are managed efficiently and that excess funds are appropriately reallocated or eliminated.