Explanatory Statement
Appropriation Act (No. 1) 2006-2007, Subsection 9(1) – 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 November 2006 and numbered 4 of 2006-2007.
The legislative authority under which the instrument is made
Section 9 of Appropriation Act (No. 1) 2006-2007 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 agency in the Finance portfolio, 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 subsection 9(5) and subsection 9(6) of Appropriation Act (No. 1) 2006-2007, 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 the departmental item for the Department of Transport and Regional Services (DOTARS) in Appropriation Act (No. 1) 2006-2007 be reduced by $2,956,000.
Background
On 30 October 2006, the Minister for Local Government, Territories and Roads wrote to the Minister for Finance and Administration seeking a reduction of DOTARS’s departmental item under Appropriation Act (No. 1) 2006-2007 by $2,956,000. These reductions relate to the transfer of the Jervis Bay Territories function from departmental to administered items.
Notes on the instrument
The instrument provides that the appropriation item in column 1 for the agency 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 Instrument Act 2003, DOTARS has been consulted in preparation of this instrument.
Overview
The Appropriation Act (No. 1) 2006-2007, enacted by the Parliament of Australia, was designed to address the issue of excess departmental appropriations that could arise due to various reasons such as reclassifications, efficiency savings, or the abolition of programs. The Act allows for the reduction of these appropriations upon a written request from the relevant Minister or Chief Executive. This mechanism ensures that any surplus funds are appropriately managed and reallocated within the Consolidated Revenue Fund. The policy objective is to maintain fiscal efficiency and prevent unnecessary accumulation of funds in departmental appropriations, thereby supporting effective budget management.
The Explanatory Statement for the "Determination to Reduce Appropriation Upon Request", dated 29 November 2006, outlines the process and authority under which the Finance Minister can reduce the departmental item for an entity, in this case, the Department of Transport and Regional Services (DOTARS), by up to the lesser of the requested amount or the remaining balance. This particular determination followed a request from the Minister for Local Government, Territories and Roads to adjust the appropriation by $2,956,000 due to the transfer of the Jervis Bay Territories function. The instrument adheres to the provisions set out in the Appropriation Act, ensuring that any reduction does not exceed the allowable limits and has been prepared in consultation with DOTARS as required by the Legislative Instruments Act 2003.
Scope and Application
The Appropriation Act (No. 1) 2006-2007 pertains to the management of government finances, specifically concerning the appropriation of funds to various departments and agencies. Under subsection 9(1), the Act empowers the Finance Minister to reduce a departmental item for an entity upon receiving a written request from the relevant Minister responsible or the Chief Executive in cases where the Finance portfolio is involved. This authority is intended to allow for the elimination of excess appropriations, which can arise from reclassification of funds, cost savings due to efficiency, or the cessation of a government program before its appropriation is fully expensed. The reduction of an appropriation item is subject to a limit, not exceeding the amount requested by the Minister or Chief Executive, and the remaining balance in the Consolidated Revenue Fund. The Act applies to federal entities and departments within the Commonwealth of Australia, and its scope is limited to the financial management of federal government funds. There are no stated exclusions or exemptions in the Act; however, the extent of application can be further defined or restricted through subordinate instruments as deemed necessary by the relevant authorities.
Key Provisions
The main operative sections of the Appropriation Act (No. 1) 2006-2007, particularly subsection 9(1), empower the Finance Minister to reduce a departmental appropriation upon receiving a written request from the relevant Minister or Chief Executive of an agency within the Finance portfolio (subsection 9(1)). This provision allows for the adjustment of departmental appropriations when there are surplus funds, which can occur due to reclassification of funds, efficiency savings, or the cessation of government programs before the appropriation is expensed (subsection 9(5)). The reduction is capped by the lesser of the requested amount or the remaining balance in the appropriation item within the Consolidated Revenue Fund (subsection 9(6)).
The obligations under this Act require the responsible Minister or Chief Executive to formally request in writing any reduction in departmental appropriations. The Finance Minister must then review the request and ensure the reduction does not exceed the requested amount or the available balance in the appropriation item. The Act mandates that DOTARS, as the entity affected by the reduction, is consulted during the preparation of the instrument, ensuring transparency and stakeholder engagement in the financial adjustments process.
Failure to comply with the requirements set forth in the Act can lead to legal consequences. While the explanatory statement does not specify particular offences, it is reasonable to infer that improper or unauthorized reductions could be challenged in court, potentially resulting in civil liabilities. The maximum penalties for such breaches, if any, are not explicitly stated in the document but would typically be outlined in the relevant administrative or criminal legislation.