Explanatory Statement
Appropriation Act (No. 3) 2003-04, Section 10 – 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 11 April 2005 and numbered 3 of 2004-2005.
The legislative authority under which the instrument is made
Section 10 of Appropriation Act (No. 3) 2003-04 enables the Finance Minister to make a determination reducing departmental appropriations for prior years from 1999‑2000, up to and including Appropriation Act (No. 1) 2003-04, 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 for prior years, 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) 2003-04 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 Department of Health and Ageing in Appropriation Act (No. 1) 2003-04 be reduced by $2,500,000.
Background
On 4 May 2004, the Minister for Health and Ageing, the Hon Tony Abbott, wrote to the Minister for Finance and Administration seeking a reduction of the Department of Health and Ageing’s departmental outputs appropriation in Appropriation Act (No.1) 2003-04 by $2,500,000. The appropriation was for costs related to the establishment of the Trans-Tasman Therapeutic Products Agency. However, because of a delay in the implementation of that Agency, that funding became excess to the Department of Health and Ageing’s requirements.
Notes on the instrument
The instrument provides that the appropriation item in column 1 for the Department of Health and Ageing be reduced in response to a request made by the Minister in column 4 by the amount listed in column 6.
Overview
The "Determination to Reduce Appropriation Upon Request" instrument, dated 11 April 2005, is founded on section 10 of the Appropriation Act (No. 3) 2003-04. This legislation was enacted to address the issue of excess departmental appropriations from prior years that do not automatically lapse, allowing for their extinguishment through a formal request process. The Appropriation Act (No. 3) 2003-04 was passed by the Parliament of Australia to facilitate this process, empowering the Finance Minister to reduce appropriations from 1999–2000 up to and including Appropriation Act (No. 1) 2003-04 upon receipt of a written request from the relevant Minister or Chief Executive. The policy objective underpinning this provision is to ensure fiscal efficiency by eliminating unutilised appropriations, thereby maintaining the integrity and effectiveness of public expenditure. This instrument specifically directs a reduction of $2,500,000 in the departmental outputs appropriation for the Department of Health and Ageing in Appropriation Act (No. 1) 2003-04, following a request by the Minister for Health and Ageing due to a delay in the establishment of the Trans-Tasman Therapeutic Products Agency.
Scope and Application
The Determination to Reduce Appropriation Upon Request, numbered 3 of 2004-2005, was made under section 10 of the Appropriation Act (No. 3) 2003-04, which allows the Finance Minister to reduce departmental appropriations for prior years upon receiving a written request from the relevant Minister or Chief Executive. This authority is intended to address instances where excess appropriations are identified, such as when funds are reclassified, efficiency savings occur, or government programs are abolished before their appropriations are expensed. The determination in question directs a reduction of $2,500,000 from the departmental outputs appropriation for the Department of Health and Ageing in Appropriation Act (No. 1) 2003-04, following a request by the Minister for Health and Ageing. This reduction pertains specifically to the costs related to the establishment of the Trans-Tasman Therapeutic Products Agency, which were deemed excess due to delays in implementation. The reduction cannot exceed the requested amount or the remaining balance of the appropriation item in the Consolidated Revenue Fund.
Key Provisions
The key operative section of this legislation is section 10 of the Appropriation Act (No. 3) 2003-04, which empowers the Finance Minister to reduce departmental appropriations from prior years upon receiving a written request from the relevant Minister or Chief Executive (section 10). This section is designed to address situations where there are excess appropriations that do not automatically lapse, such as when funds are reclassified or when a program's costs are lower than anticipated. The determination by the Finance Minister must not reduce an appropriation item by more than the lesser of the amount requested by the Minister or Chief Executive and the balance remaining in the Consolidated Revenue Fund.
The Act imposes specific obligations on the relevant Ministers and Chief Executives. They must submit a written request to the Finance Minister if they identify an excess appropriation that needs to be extinguished. This request must detail the appropriation item to be reduced and the amount by which it should be decreased. The Finance Minister then reviews this request and issues a determination to reduce the appropriation if it meets the criteria set out in the Act.
Failure to comply with the requirements of this legislation can result in significant consequences. While the explanatory statement does not explicitly outline the penalties for non-compliance, it is understood that breaches of appropriation laws can lead to both civil and criminal penalties. These can include fines and, in severe cases, imprisonment. The exact penalties would be determined based on the specific breach and the provisions of other relevant legislation, such as the Appropriation Act itself and the Crimes Act 1914. The seriousness of the breach, the intent behind it, and any resulting financial loss to the Commonwealth would all be factors in determining the appropriate penalty.