Explanatory Statement
Appropriation Act (No. 3) 2003-2004, Section 10(1) – 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 22 June 2006 and numbered 8 of 2005-2006.
The legislative authority under which the instrument is made
Section 10(1) of Appropriation Act (No.3) 2003-2004 enables the Finance Minister to make a determination reducing departmental 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(1) 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 for the Department of Transport and Regional Services in Appropriation Act (No.1) 2001-2002 be reduced by $12,717,628.43.
Background
On 26 May 2006, the Minister for Transport and Regional Services wrote to the Minister for Finance and Administration seeking a reduction of the Department of Transport and Regional Services departmental outputs in Appropriation Act (No.1) 2001-2002 by $12,717,628.43. These reductions relate to savings resulting from the cessation of the study into the Very High Speed Train.
Notes on the instrument
The instrument provides that the appropriation item in column 1 for the agency in column 2 be reduced in response to a request made by the Minister in column 4 by the amounts listed in column 6.
Overview
The Appropriation Act (No. 3) 2003-2004, enacted by the Parliament of Australia, addresses the issue of managing and reducing departmental appropriations that are no longer needed or have been reallocated. This legislation provides the framework for the Finance Minister to make determinations that reduce appropriations upon receiving a written request from the responsible Minister or the Chief Executive of an agency within the Finance portfolio. The underlying policy objective is to ensure fiscal efficiency and proper management of public funds by allowing the cancellation of excess appropriation items that do not automatically lapse, such as those resulting from reclassification, efficiency savings, or the abolition of a government program before the appropriation is expensed. This Act aims to prevent unnecessary expenditures and maintain budgetary discipline by allowing for the reduction of appropriations in response to changing circumstances or improved financial outcomes.
Scope and Application
The Appropriation Act (No. 3) 2003-2004 provides a mechanism for reducing departmental appropriations under specific circumstances, and the instrument in question, the "Determination to Reduce Appropriation Upon Request" dated 22 June 2006, applies this authority to reduce the appropriations for the Department of Transport and Regional Services. The Act applies to appropriations made by the Commonwealth of Australia and allows the Finance Minister to make a determination to reduce these appropriations based on a written request from the relevant Minister or Chief Executive. The instrument specifically targets the appropriation item for the Department of Transport and Regional Services in Appropriation Act (No.1) 2001-2002, reducing it by $12,717,628.43 in response to savings from the cessation of a study on the Very High Speed Train. This reduction is governed by the limitations set out in section 10(1) of the Act, ensuring that the reduction cannot exceed the amount requested or the remaining balance of the appropriation item. The instrument underscores the need for fiscal efficiency and the realignment of resources within the government portfolio.
Key Provisions
The primary operative sections of this legislation are found in Section 10(1) of the Appropriation Act (No. 3) 2003-2004. This section enables the Finance Minister to make a determination reducing departmental appropriations made under the Act, upon receiving a written request from the responsible Minister or, in the case of an agency within the Finance portfolio, from the Chief Executive. This mechanism is intended to extinguish any excess departmental appropriation items that do not automatically lapse, such as those arising from reclassifications, efficiency savings, or the abolition of government programs before their appropriations are expensed.
Under this Act, the Finance Minister's determination cannot reduce an appropriation item by more than the lesser of the amount requested by the responsible Minister or Chief Executive, and the remaining balance of the appropriation item in the Consolidated Revenue Fund. The obligations imposed by this legislation primarily rest on the responsible Ministers and Chief Executives to submit written requests for the reduction of appropriations when applicable circumstances, such as savings from program cessations or reclassifications, arise. The Finance Minister is then required to review these requests and issue a determination that adheres to the constraints outlined in the Act.
The consequences of breaching the provisions of this Act are not explicitly stated in the explanatory statement provided. However, the failure to adhere to the requirements of the Act, such as submitting a written request for appropriation reduction or the Finance Minister not acting within the constraints specified, could potentially lead to legal or financial repercussions. Although the specific penalties or consequences for breaches are not detailed in the provided text, they could involve legal action or financial audits to ensure compliance with the appropriation laws.