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 30 June 2005 and numbered 6 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 from prior years, from Appropriation Act
(No. 1) 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, 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 appropriations for the Australian Electoral Commission be reduced by a total of $13,441,282, as follows:
Appropriation Act (No. 1) 1999-2000 be reduced by $5,129,583;
Appropriation Act (No. 1) 2000-2001 be reduced by $2,018,321;
Appropriation Act (No.1) 2001-2002 be reduced by $2,628,810; and
Appropriation Act (No. 1) 2002-2003 be reduced by $3,664,568.
Background
On 27 June 2005, the Electoral Commissioner, Mr Andy Becker, wrote to the Minister for Finance and Administration seeking a reduction of the Australian Electoral Commission’s departmental outputs appropriations, as listed in the Appropriation Acts above, by a total of $13,441,282. The appropriations were provided to the Commission to implement certain Regulations under the Electoral and Referendum Amendment Act (No. 1) 1999. However, as the proposed Regulations were disallowed by the Senate in May 2002, these appropriations are no longer required for this purpose by the Australian Electoral Commission.
Notes on the instrument
The instrument provides that the appropriation items in column 1 for the Australian Electoral Commission be reduced in response to a request made by the Chief Executive in column 4 by the amounts listed in column 6.
Overview
The Appropriation Act (No. 3) 2003-04 was enacted to provide for the appropriation of revenue and the raising of loans for the financial year ending 30 June 2004, and for related purposes. This Act was introduced to address the need for a legislative framework that allows for the efficient management of government funds, ensuring that appropriations are aligned with actual needs and expenditures. The policy objective of this Act, particularly in relation to section 10, is to provide flexibility in the management of departmental appropriations by enabling the reduction of prior year appropriations upon request, thereby preventing the accumulation of excess funds that do not automatically lapse. The authority to make such reductions lies with the Finance Minister, who can act on a written request from the relevant Minister or Chief Executive, ensuring that any reductions do not exceed the amount requested or the remaining balance in the Consolidated Revenue Fund. This legislative mechanism helps in maintaining fiscal discipline and ensuring that government resources are utilised effectively.
Scope and Application
The "Determination to Reduce Appropriation Upon Request", dated 30 June 2005, is an instrument made under section 10 of the Appropriation Act (No. 3) 2003-04, enabling the Finance Minister to reduce departmental appropriations from prior years upon receiving a written request from the relevant Minister or Chief Executive. This Act applies specifically to the Australian Electoral Commission, allowing for reductions in appropriations from Appropriation Act (No. 1) 1999-2000 up to and including Appropriation Act (No.1) 2003-04. The reductions are made to address excess appropriations resulting from reclassifications, efficiency savings, or the abolition of government programs. The instrument in question reduces the Australian Electoral Commission's departmental outputs appropriations by a total of $13,441,282, following a request from the Electoral Commissioner. The reductions cannot exceed the lesser of the requested amount or the balance of the appropriation item remaining in the Consolidated Revenue Fund.
Key Provisions
Section 10 of the Appropriation Act (No. 3) 2003-04 empowers the Finance Minister to reduce departmental appropriations from prior years, specifically from Appropriation Act (No. 1) 1999-2000 up to and including Appropriation Act (No. 1) 2003-04, upon receiving a written request from the relevant Minister or Chief Executive. This provision is designed to manage and extinguish excess appropriations that do not automatically lapse. Such excess may occur due to reclassification of funds, efficiency savings, or the abolition of a government programme before the appropriation is expensed. The reduction must not exceed the lesser of the requested amount or the remaining balance of the appropriation item in the Consolidated Revenue Fund.
The obligations under this Act require the Minister for Finance and Administration to carefully consider the written request for appropriation reduction, ensuring it aligns with the conditions stipulated in section 10. The responsible Minister or Chief Executive must provide a legitimate and justifiable reason for the request, which should be supported by evidence demonstrating the unnecessity of the funds. Additionally, the Finance Minister must ensure the reduction does not exceed the specified limits, thus maintaining fiscal responsibility and adherence to parliamentary appropriation laws.
Failure to comply with the requirements set out in the Appropriation Act (No. 3) 2003-04 can lead to significant consequences. There are no explicit offences outlined in the explanatory statement, but misuse or improper reduction of appropriations could result in financial mismanagement and potential legal scrutiny. The penalties for such breaches are not detailed in the explanatory statement, but they could potentially include civil or administrative penalties, as well as repercussions under broader financial administration laws. Ensuring compliance with these provisions is crucial to maintain the integrity of the government's financial operations and accountability.