Determination to Reduce Appropriation Upon Request (No. 7 of 2006-2007)

Administered by Department of Finance

Legislation au F2007L01078 Not in force Legislative Instrument

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Explanatory Statement

Appropriation Act (No. 3) 2003-2004, Subsection 10(3) – Reduction of Appropriations from Prior Years upon Request

Appropriation Act (No. 1) 2004-2005, Subsection 9(2) – Reduction of Appropriations Upon Request

Appropriation Act (No. 1) 2005-2006, Subsection 9(2) – Reduction of Appropriations Upon Request

Appropriation Act (No. 4) 2003-2004, Subsection 12(3) – Reduction of Appropriations from Prior Years upon Request

Appropriation Act (No. 2) 2004-2005, Subsection 11(2) – Reduction of Appropriations Upon Request

Appropriation Act (No. 2) 2005-2006, Subsection 11(2) – 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 12 April 2007 and numbered 7 of 2006-2007.

The legislative authority under which the instrument is made

The Finance Minister is able 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 entity for which the Finance Minister is responsible, the Chief Executive under the following:

Section 10 of Appropriation Act (No. 3) 2003-2004;

Section 9 of Appropriation Act (No. 1) 2004-2005; and

Section 9 of Appropriation Act (No. 1) 2005-2006.

The Finance Minister is able to make a determination reducing an administered assets and liabilities item or an other departmental item for an entity upon receipt of a written request from the Minister responsible or in the case of an entity for which the Finance Minister is responsible, the Chief Executive under the following:

Section 12 of Appropriation Act (No. 4) 2003-2004;

Section 11 of Appropriation Act (No. 2) 2004-2005; and

Section 11 of Appropriation Act (No. 2) 2005-2006.

The provisions were included in the Appropriation Acts to enable excess departmental and administered 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 subsections 10(6) and 10(7) of Appropriation Act (No. 3) 2003-2004; subsections 9(5) and 9(6) of Appropriation Act (No. 1) 2004-2005 and Appropriation Act (No. 1) 2005-2006; subsections 12(7) and 12(8) of  Appropriation Act (No. 4) 2003-2004; and subsections 11(5) and 11(6) of Appropriation Act (No. 2) 2004-2005 and Appropriation Act (No. 4) 2005-2006 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 items for the Department of Finance and Administration (Finance) be reduced by a total of $24,289,363, as follows:

  • Appropriation Act (No. 1) 2001-2002 be reduced by $40,363;
  • Appropriation Act (No. 1) 2004-2005 be reduced by $3,199,000; and
  • Appropriation Act (No. 1) 2005-2006 be reduced by $21,050,000. 

It also directs that the administered assets and liabilities for Finance be reduced by a total of $39,147,827.27, as follows:

  • Appropriation Act (No. 2) 2002-2003 be reduced by $31,082,821;
  • Appropriation Act (No. 2) 2003-2004 be reduced by $7,553,932;
  • Appropriation Act (No. 2) 2004-2005 be reduced by $390,120; and
  • Appropriation Act (No. 2) 2005-2006 be reduced by $120,954.27. 

Background

The Chief Financial Officer of the Department of Finance and Administration, Mr Dominic Staun, wrote to the Minister for Finance and Administration on 31 January 2007, requesting approval for a determination to reduce Finance’s departmental items for the financial years 2001-02 to 2005-06 and administered assets and liabilities for the financial years 2002-03 to 2005-06.

The following reductions were requested:

  • Departmental items under Appropriation Act (No. 1) 2001-2002, $40,363 - Surplus funds relating to asset sales activities administered by the Office of Asset Sales and Commercial Support;
  • Departmental items under Appropriation Act (No. 1) 2004-2005, $3,199,000: $499,000 relating to a return of Comcover supplementation due to lower than anticipated insurance premiums during 2004-2005 and $2,700,000 relating to savings relating to the implementation of the Government’s procurement arrangements for the Australian-United States Free Trade Agreement;
  • Departmental items under Appropriation Act (No. 1) 2005-2006, $21,050,000: $738,000 in savings relating to ASC scoping study, $1,812,000 in savings relating to the implementation of the Government’s procurement arrangements for the Australian-United States Free Trade Agreement and $18,500,000 in savings relating to the Telstra 3 selling costs;
  • Administered assets and liabilities under Appropriation Act (No. 2) 2002-2003, $31,082,821: $18,382,821 in savings relating to extinguishing the Australian Government’s superannuation liability in respect of former state rail employees of South Australia and Tasmania and $12,700,000 in savings relating to the wind-up of Employment National Ltd;
  • Administered assets and liabilities under Appropriation Act (No. 2) 2003-2004, $7,553,932: $5,753,932 in savings relating to extinguishing the Australian Government’s superannuation liability in respect of former state rail employees of South Australia and Tasmania and $1,800,000 in savings relating to the wind-up of Employment National Ltd;
  • Administered assets and liabilities under Appropriation Act (No. 2) 2004-2005, $390,120 - Savings relating to extinguishing the Australian Government’s superannuation liability in respect of former state rail employees of South Australia and Tasmania; and
  • Administered assets and liabilities under Appropriation Act (No. 2) 2005-2006, $120,954.27 - Funding for Act of Grace payments no longer required as Finance is provided annual funding for Act of Grace payments.

Notes on the instrument

The instrument provides that the appropriation item in column 1 for the entity in column 2 is reduced in response to a request made by the officer in column 4 by the amounts listed in column 6.

In accordance with the Legislative Instruments Act 2003, Finance has been consulted in preparation of this instrument.

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