Explanatory Statement
Appropriation Act (No. 1) 2004-05, 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 is numbered 5 of 2004-05.
The legislative authority under which the instrument is made
Section 9 of Appropriation Act (No. 1) 2004-05 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 first 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; or
- 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. 1) 2004-05 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 provided to the Australian Federal Police in Appropriation Act (No. 1) 2004-05 be reduced by $135,000,000.
Background
On 22 June 2005, the Minister for Justice and Customs, Senator the Hon Chris 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. 1) 2004-05 by $135,000,000. This amount was identified as being excess to requirements due to savings arising from a delay in the deployment of personnel to, and the withdrawal of staff from, Papua New Guinea ($94,000,000), and a project surplus for the Regional Assistance Mission to the Solomon Islands as a result of quicker than expected stabilisation of the law enforcement situation in the Solomon Islands and the achievement of cost effective service support programmes ($41,000,000).
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. 1) 2004-05, enacted by the Parliament of Australia, provides a mechanism for the Finance Minister to reduce departmental appropriations upon request from the relevant Minister or Chief Executive. This legislation, which includes provisions first introduced in the Appropriation Act (No. 3) 2003-04, aims to address instances where departmental appropriations exceed actual requirements, such as when there are reclassifications, efficiency savings, or the abolition of government programs. The Act facilitates the adjustment of appropriations to better reflect current needs, ensuring fiscal efficiency and preventing unnecessary expenditure. The policy objective is to enable the responsible Minister to request reductions in appropriation amounts when circumstances warrant, thereby aligning the budget with operational realities and enhancing financial management.
Scope and Application
The "Determination to Reduce Appropriation Upon Request", dated 30 June 2005, applies to the appropriation of funds for the Australian Federal Police under the Appropriation Act (No. 1) 2004-05. This legislation allows the Finance Minister to reduce departmental appropriations upon receiving a written request from the relevant Minister or Chief Executive. The purpose of this particular instrument is to reduce the departmental outputs appropriation for the Australian Federal Police by $135,000,000 due to savings from delayed personnel deployment to Papua New Guinea and a project surplus for the Regional Assistance Mission to the Solomon Islands. The jurisdictional reach of this Act is federal, applying to government departments and agencies within the Commonwealth of Australia. The Act does not specify exclusions or exemptions but is limited by the lesser of the requested amount or the balance of the appropriation item remaining in the Consolidated Revenue Fund. The application of this Act may be further extended or restricted through subordinate instruments as needed.
Key Provisions
The main operative sections of the "Determination to Reduce Appropriation Upon Request" (F2005L01977) are rooted in section 9 of the Appropriation Act (No. 1) 2004-05. This section allows the Finance Minister to reduce departmental appropriations following a written request from the responsible Minister or the Chief Executive of an agency within the Finance portfolio. This mechanism was initially introduced to address excess appropriations that do not lapse automatically, such as those arising from reclassification, efficiency savings, or the abolition of a government program before the appropriation is expensed. The determination made by the Finance Minister cannot exceed the amount requested by the Minister or Chief Executive, nor can it exceed the remaining balance of the appropriation item in the Consolidated Revenue Fund. In this instance, the determination reduces the departmental outputs appropriation for the Australian Federal Police by $135,000,000.
The obligations imposed by this Act on the relevant parties are straightforward. The responsible Minister or Chief Executive must submit a written request to the Finance Minister detailing the specific appropriation item to be reduced and the amount requested. The Finance Minister is then required to assess the request, ensuring that the proposed reduction does not exceed the requested amount or the remaining balance in the Consolidated Revenue Fund. Upon approval, the Finance Minister issues the determination, which legally reduces the appropriation by the specified amount. In this case, the Minister for Justice and Customs requested a reduction in the appropriation for the Australian Federal Police, citing savings from delayed deployments and project surpluses.
The consequences of breaching the requirements set out in the Appropriation Act (No. 1) 2004-05 are not explicitly detailed within the explanatory statement. However, given the statutory nature of the Act, any failure to adhere to the procedures for requesting and approving appropriation reductions could potentially lead to legal challenges regarding the validity of the appropriation adjustments. Furthermore, if a determination is made in excess of the allowable amount, it could be subject to review or correction by the relevant authorities, potentially resulting in financial discrepancies or legal disputes over the misallocation of funds. The explanatory statement does not specify maximum penalties for breaches but implies that any improper actions could have significant financial and administrative repercussions.