Explanatory Statement
Appropriation Act (No. 1) 2005-2006, Section 9 – 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 29 June 2006 and numbered 9 of 2005-2006.
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 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 9 of Appropriation Act (No. 1) 2005-2006 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 Defence in Appropriation Act (No. 1) 2005-2006 be reduced by $69,200,000.
Background
On 1 June 2006, the Minister for Defence, the Hon Brendan Nelson MP, wrote to the Minister for Finance and Administration seeking a reduction of the Department of Defence’s departmental outputs appropriation in Appropriation Act (No. 1) 2005-2006 by $69,200,000. This reduction relates to funds appropriated in excess of requirements for Project Pitchpipe, logistics funding for Naval Aviation and Defence Housing Authority competitive neutrality funding.
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.