Explanatory Statement
Appropriation Act (No. 1) 2005-2006, subsection 9(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 21 May 2008 and numbered 8 of 2007-2008.
The legislative authority under which the instrument is made
Section 9 of Appropriation Act (No. 1) 2005-2006 enables the Finance Minister 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 the Finance Minister is responsible for, the Chief Executive.
The provisions were included in the Appropriation Acts to enable excess departmental 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 subsection 9(1) of Appropriation Act (No. 1) 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 item for the Department of Family and Community Services in Appropriation Act (No. 1) 2005-2006 be reduced by $10,253,000.
Background
On 24 April 2008, the Minister for Families, Housing, Community Services and Indigenous Affairs wrote to the Minister for Finance and Deregulation requesting a determination to reduce the Department of Family and Community Services’ departmental item under Appropriation Act (No. 1) 2005-2006 by $10,253,000. This reduction is due to the return of unspent advertising relating to the More Help for Families initiative.
Notes on the instrument
The instrument provides that the appropriation items in column 1 for the entity in column 2 be reduced in response to a request made by the Minister in column 4 by the amounts listed in column 6.
As a result of the Administrative Arrangements Orders made on the 27 January 2006 and
3 December 2007, the Department of Family and Community Services is now named the Department of Families, Community Services and Indigenous Affairs.
In accordance with the Legislative Instruments Act 2003, the Department of Families, Housing, Community Services and Indigenous Affairs was consulted in the preparation of this instrument.
Overview
The Appropriation Act (No. 1) 2005-2006, enacted by the Australian Parliament, addresses the problem of excess appropriations within government entities. It provides the Finance Minister with the authority to reduce a departmental appropriation item upon request from the responsible Minister or Chief Executive, ensuring efficient financial management by extinguishing any unneeded funds. This Act was designed to provide flexibility in budgetary allocations, accommodating changes such as reclassifications, efficiency savings, or policy changes that result in reduced costs for government programs. The policy objective is to ensure that the government's financial resources are allocated appropriately and efficiently, avoiding waste and ensuring that funds are used as intended by Parliament.
Scope and Application
The Determination to Reduce Appropriation Upon Request, issued under section 9 of the Appropriation Act (No. 1) 2005-2006, applies to the Department of Families, Community Services and Indigenous Affairs. This Act empowers the Finance Minister to adjust the appropriation of a departmental item for a specific entity upon receiving a written request from the relevant Minister or the Chief Executive, if the Finance Minister is responsible for the entity. The purpose of this legislation is to allow for the reduction of appropriations when excess funds arise from reclassifications, efficiency savings, or policy changes such as the abolition of a program before its appropriation is expensed. The instrument in question, dated 21 May 2008, reduces the departmental item for the Department of Families, Community Services and Indigenous Affairs by $10,253,000 due to the return of unspent advertising funds related to the More Help for Families initiative. This adjustment must not exceed the requested amount or the remaining balance of the appropriation item in the Consolidated Revenue Fund, as stipulated by subsection 9(1) of the Act. The legislative framework also ensures consultation with relevant departments in the preparation of such instruments, as mandated by the Legislative Instruments Act 2003.
Key Provisions
The main operative sections of the legislation, specifically the Determination to Reduce Appropriation Upon Request, allow the Finance Minister to reduce the appropriation of a departmental item for an entity following a written request from the responsible Minister or Chief Executive. This is detailed in section 9(1) of the Appropriation Act (No. 1) 2005-2006. The reduction is permissible only to the extent of the request and the remaining balance of the appropriation item in the Consolidated Revenue Fund. This process is intended to manage and extinguish excess appropriation items that may arise due to reclassification, efficiency savings, or policy changes that result in the abolition of a program before the appropriation is expensed.
The Act imposes specific obligations on the relevant parties involved in the appropriation process. The Minister responsible for a department or the Chief Executive in cases where the Finance Minister is responsible must submit a written request to the Finance Minister to reduce the appropriation. The Finance Minister must then review the request and issue a determination that adheres to the limits set by section 9(1) of the Act. Furthermore, the Act requires that any reductions are made in accordance with the Legislative Instruments Act 2003, ensuring proper consultation and procedural integrity in the preparation of the determination.
Breaching the provisions of the Appropriation Act (No. 1) 2005-2006 could lead to various civil or criminal consequences, depending on the nature and severity of the breach. While the Act does not explicitly detail offences, penalties, or specific consequences for non-compliance, it is essential to note that any misuse of appropriated funds or improper reductions could result in legal action. The penalties for such breaches could include fines, reimbursement of misused funds, and potential criminal charges if the breach is deemed severe enough to warrant such action. The maximum penalties would be determined in the context of the specific breach and the relevant laws governing financial misconduct in Australia.