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.

Overview

The Determination to Reduce Appropriation Upon Request, dated 12 April 2007, pertains to the legislative authority granted to the Finance Minister to reduce departmental and administered appropriation items for the Department of Finance and Administration (Finance). This authority stems from specific sections of the Appropriation Acts from 2003-2004 to 2005-2006, which allow for the reduction of appropriations upon a written request from the relevant Minister or Chief Executive. The primary purpose of these provisions is to address excess appropriations that may arise due to various reasons, such as reclassification of funds, efficiency savings, or the abolition of programs before the appropriation is expensed. The instrument itself directs a reduction in departmental items for the financial years 2001-2002 to 2005-2006 and administered assets and liabilities for the financial years 2002-2003 to 2005-2006, as requested by the Chief Financial Officer of Finance, Mr Dominic Staun. The reductions are made to reflect surplus funds from asset sales, savings from lower insurance premiums and procurement arrangements, and the extinguishment of superannuation liabilities among other things. Enacted by the Australian Parliament, the policy objective of these appropriations acts is to ensure fiscal efficiency and accuracy in government spending by allowing the adjustment of appropriations in response to changing circumstances or budgetary needs.

Scope and Application

The instrument, titled "Determination to Reduce Appropriation Upon Request," dated 12 April 2007, is applicable to the Department of Finance and Administration, focusing on the reduction of departmental items and administered assets and liabilities for specific financial years. The scope of the Act pertains to the Finance Minister's authority to reduce appropriations for entities based on written requests from the responsible Minister or Chief Executive. This authority is derived from several sections of the Appropriation Acts, including sections 10 and 12 of Appropriation Act (No. 3) 2003-2004, and sections 9 and 11 of the 2004-2005 and 2005-2006 appropriations acts. The instrument specifically directs reductions in appropriations for the financial years 2001-2002 to 2005-2006 and applies to administered assets and liabilities for the financial years 2002-2003 to 2005-2006. The Act does not specify any exclusions or exemptions, and the reductions cannot exceed the requested amount or the balance remaining in the Consolidated Revenue Fund. The reductions were made in response to specific savings and surplus funds identified in the Department's operations.

Key Provisions

The main operative sections of the legislation allow the Finance Minister to reduce appropriations upon a written request from the responsible Minister or the Chief Executive, depending on the entity in question. Specifically, 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 enable the Finance Minister to reduce a departmental item for an entity, while 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 allow for reductions in administered assets and liabilities items or other departmental items. These provisions are intended to address instances where excess appropriations arise due to various reasons, such as reclassification of amounts, efficiency savings, or policy changes leading to the abolition of a programme. The obligations and requirements imposed by this Act include ensuring that any reduction in appropriations must not exceed the lesser of the amount requested by the responsible Minister or Chief Executive and the balance of the appropriation item remaining in the Consolidated Revenue Fund. This is stipulated in 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. The Finance Minister must also consult with Finance in the preparation of the instrument reducing appropriations, as required by the Legislative Instruments Act 2003. The legislation does not explicitly outline specific offences, penalties, or civil/criminal consequences for breaches of its provisions. However, it is implied that any improper or unauthorised reduction of appropriations would be subject to the general legal principles governing administrative actions and could potentially lead to legal challenges or financial accountability measures. The focus of the legislation appears to be on the procedural correctness and necessity of reducing appropriations, rather than prescribing specific penalties for breaches.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.