Explanatory Statement
Appropriation Act (No. 4) 2003-2004, subsection 12(2) – Reduction of appropriations from prior years upon request
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 19 of 2006-2007.
The legislative authority under which the instrument is made
Section 12 of Appropriation Act (No. 4) 2003-2004 enables the Finance Minister to make a determination reducing an administered assets and liabilities item or an other 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.
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 12(7) and 12(8) of Appropriation Act (No. 4) 2003-2004 and 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 equity injections for the Department of Foreign Affairs and Trade (DFAT) in Appropriation Act (No. 2) 1999-2000 be reduced by $368,000. The instrument also directs that departmental items for DFAT in Appropriation Act (No. 1) 2001-2002 be reduced by $23,064,001.
Background
On 30 May 2007, the Minister for Foreign Affairs (the Minister) wrote to the Minister for Finance and Administration seeking a reduction of DFAT’s equity injections in Appropriation Act (No. 2)
1999-2000 by $368,000. This funding is not required as DFAT and another agency within the portfolio received capital appropriation for the same purpose.
The Minister is also seeking a reduction of DFAT’s departmental items in Appropriation Act (No. 1) 2001-2002 by $23,064,001. This reduction is comprised of foreign exchange gains and surplus capital use charges.
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, DFAT has been consulted in the preparation of this instrument.
Overview
The "Determination to Reduce Appropriation Upon Request", dated 26 June 2007, is a legislative instrument made under the authority of the Appropriation Act (No. 4) 2003-2004 and the Appropriation Act (No. 3) 2003-2004, enabling the Finance Minister to adjust appropriations upon written request from the relevant Minister or Chief Executive. This mechanism was introduced to address instances where excess appropriations might arise due to reclassification, efficiency savings, or the abolition of programs, ensuring that the Consolidated Revenue Fund is not burdened by unnecessary funds. The policy objective of these provisions is to streamline financial management by allowing the extinguishment of excess appropriation items. The instrument in question specifically directs a reduction in equity injections and departmental items for the Department of Foreign Affairs and Trade, following a request from the Minister for Foreign Affairs, who identified that certain appropriations were duplicated or no longer required.
Scope and Application
The "Determination to Reduce Appropriation Upon Request" instrument, issued on 26 June 2007, applies to the Department of Foreign Affairs and Trade (DFAT) under the legislative authority provided by sections 10 and 12 of the Appropriation Acts (No. 1) 2001-2002 and (No. 4) 2003-2004 respectively. This instrument facilitates the reduction of specific appropriation items within DFAT as per the written request from the Minister for Foreign Affairs. The reductions pertain to an equity injection of $368,000 in Appropriation Act (No. 2) 1999-2000 and departmental items of $23,064,001 in Appropriation Act (No. 1) 2001-2002, both resulting from capital appropriation duplication and surplus capital use charges. The geographic and jurisdictional reach of this instrument is limited to the Commonwealth level, specifically targeting federal entities like DFAT. The instrument does not introduce any exclusions or exemptions but adheres strictly to the limits stipulated in the requesting document, reducing appropriations only up to the amount requested and the remaining balance in the Consolidated Revenue Fund. This instrument underscores the ability of the Finance Minister to adjust appropriations based on departmental needs and financial efficiency, ensuring that federal funds are utilised effectively and appropriately.
Key Provisions
The primary operative sections of the Determination to Reduce Appropriation Upon Request (F2007L02091) are sections 10 and 12 of the Appropriation Act (No. 3 and No. 4) 2003-2004, respectively. These sections empower the Finance Minister to adjust the appropriation items of certain entities upon receiving a written request from the responsible Minister or Chief Executive. Specifically, section 12 allows for the reduction of administered assets and liabilities items or other departmental items, while section 10 pertains to departmental items. The determination issued by the Finance Minister cannot exceed the amount requested by the responsible Minister or Chief Executive, nor can it exceed the balance of the appropriation item in the Consolidated Revenue Fund.
The obligations and requirements imposed by the Act on the parties involved include the necessity for the Minister responsible or Chief Executive to submit a formal, written request to the Finance Minister for any reduction in appropriations. This request must detail the specific appropriation items to be reduced and the amount by which these items should be decreased. Additionally, the Finance Minister is obligated to ensure that the reduction does not exceed the lesser of the requested amount or the balance of the appropriation item remaining in the Consolidated Revenue Fund. This process is designed to maintain fiscal discipline and ensure that government funds are allocated efficiently and only as needed.
For breaches of the provisions outlined in the Act, there are no explicit offences, penalties, or civil/criminal consequences mentioned in the explanatory statement. However, it is implied that any improper or unauthorised reduction of appropriations could lead to administrative or financial irregularities, which might result in further scrutiny or legal consequences depending on the specific circumstances and the applicable laws. The key focus of the Act is on the procedural correctness and fiscal responsibility in the reduction of appropriation items, rather than on penalising specific breaches.