Explanatory Statement
Appropriation Act (No. 3) 2003-04, 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 30 June 2005 and numbered 2 of 2004-2005.
The legislative authority under which the instrument is made
Section 9 of Appropriation Act (No. 3) 2003-04 enables the Finance Minister to make a determination reducing departmental appropriations in 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 provision was included in Appropriation Act (No. 3) 2003-04 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. 3) 2003-04 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 appropriation for the Australian Federal Police in Appropriation Act (No. 3) 2003-04 be reduced by $14,400,000.
Background
On 8 June 2005, the Minister for Justice and Customs, Senator the Hon Christopher Ellison, wrote to the Minister for Finance and Administration seeking a reduction of the Australian Federal Police’s departmental outputs appropriation in Appropriation Act (No.3) 2003-04 by $14,400,000. The appropriation was originally provided to cover expenditure in relation to the deployment of Australian Federal Police officers to Papua New Guinea under the Enhanced Cooperation Programme, which was expected to occur in early 2004. However, because of delays in the finalisation of the enabling Treaty and legislation, the amount of $14,400,000 was identified as being in excess to the Australian Federal Police’s requirements.
Notes on the instrument
The instrument provides that the appropriation item in column 1 for the Australian Federal Police be reduced in response to a request made by the Minister in column 4 by the amount listed in column 6.
Overview
The Appropriation Act (No. 3) 2003-04 was enacted to provide for the appropriation of revenue and the application of the Consolidated Revenue Fund for the Commonwealth Government's services for the financial year 2003-04, and for related purposes. The Act was introduced to address the need for flexibility in managing government appropriations, particularly in instances where departmental requirements change due to unforeseen circumstances such as delays in policy implementation or changes in programme costs. The policy objective was to allow for the reduction of appropriations that are no longer required, thereby enhancing fiscal efficiency and ensuring funds are allocated where they are most needed. Enacted by the Parliament of Australia, the Act provides mechanisms for the Finance Minister to adjust appropriations based on requests from relevant Ministers or Chief Executives, ensuring a responsive and adaptive fiscal management system.
Scope and Application
The "Determination to Reduce Appropriation Upon Request" instrument, dated 30 June 2005, is made under section 9 of the Appropriation Act (No. 3) 2003-04, allowing the Finance Minister to reduce departmental appropriations in response to a written request from the responsible Minister or Chief Executive of an agency within the Finance portfolio. This legislative authority exists to extinguish excess appropriation items that do not automatically lapse, which may arise due to reclassification, efficiency savings, or the abolition of a government program. The instrument specifically reduces the departmental outputs appropriation for the Australian Federal Police by $14,400,000, following a request from the Minister for Justice and Customs on 8 June 2005. This reduction responds to delays in the Enhanced Cooperation Programme deployment to Papua New Guinea, which led to an excess appropriation for the Australian Federal Police. The reduction cannot exceed the requested amount or the balance remaining in the Consolidated Revenue Fund.
Key Provisions
The Determination to Reduce Appropriation Upon Request (F2005L01975) is an instrument made under section 9 of the Appropriation Act (No. 3) 2003-04. This provision allows the Finance Minister to reduce departmental appropriations upon receiving a written request from the relevant Minister or Chief Executive. Specifically, section 9 enables the Finance Minister to issue a determination to reduce an appropriation item by no more than the lesser of the amount requested or the remaining balance of that appropriation item in the Consolidated Revenue Fund. This mechanism is intended to manage and extinguish any excess departmental appropriations that do not automatically lapse, such as those arising from reclassifications, efficiency savings, or policy changes leading to the abolition of a program before the appropriation is expensed.
The obligations imposed by this Act on the parties involved are straightforward. The Minister responsible for a department or the Chief Executive of an agency in the Finance portfolio must submit a written request to the Finance Minister if they identify an excess appropriation item. The Finance Minister is then obligated to review the request and, if appropriate, issue a determination that reduces the appropriation by the requested amount or the remaining balance, whichever is less. This ensures a transparent and controlled process for managing departmental budgets and preventing over-appropriation.
There are no explicit offences or penalties detailed in the Determination to Reduce Appropriation Upon Request itself. However, the failure to follow the prescribed process for requesting and approving a reduction in appropriations could potentially lead to broader administrative or financial management issues. While the Determination does not stipulate specific penalties, non-compliance with financial management protocols could result in administrative consequences, such as audits or investigations into the mismanaged funds. It is important for the relevant Ministers and the Finance Minister to adhere to the legislative framework to avoid any such repercussions.