Explanatory Statement
Appropriation Act (No. 3) 2003-04, Section 10 – Reduction of Appropriations from Prior Years Upon Request
Appropriation Act (No. 2) 2004-05, Section 11 – 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 numbered 8 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 2001-2002, 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.
Section 11 of Appropriation Act (No. 2) 2004-05 enables the Finance Minister to make a determination reducing non-operating appropriations made under 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 provisions were included in the Appropriation Acts 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 or section 11 of Appropriation Act (No. 2) 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 appropriations for the Department of Finance and Administration be reduced by a total of $4,825,000, as follows:
Appropriation Act (No. 1) 2001-2002 be reduced by $3,528,000;
Appropriation Act (No. 1) 2002-2003 be reduced by $600,000; and
Appropriation Act (No.1) 2003-2004 be reduced by $697,000.
The instrument also directs that equity injections appropriations for the Department of Finance and Administration be reduced by a total of $4,000,000, as follows:
Appropriation Act (No. 2) 2004-2005 be reduced by $4,000,000.
Background
On 29 June 2005, the Chief Executive Officer of the Department of Finance and Administration,
Dr Ian Watt, wrote to the Minister for Finance and Administration seeking a reduction of the Department’s departmental outputs and equity injections appropriations, as listed in the Appropriation Acts above, by a total of $8,825,000. These unrequired amounts have arisen from several sources: specifically, the abolition of the Office of Assets Sales and Commercial Support, underspends on the sale of the Sydney Airports Basin and ComLand, and savings on the system development, implementation and support services for the Accrual Information Management System replacement project. These unspent appropriations are in excess of the Department of Finance and Administration’s requirements.
Notes on the instrument
The instrument provides that the appropriation items in column 1 for the Department of Finance and Administration be reduced in response to a request made by the Chief Executive Officer in column 4 by the amounts listed in column 6.