Explanatory Memorandum
(Circulated by the authority of the Minister for Finance, Senator the Honourable Katy Gallagher)GENERAL OUTLINE
1. This Bill would amend the Financial Framework (Supplementary Powers) Act 1997 (the Principal Act) to remove certain limiting words from section 32B (which confers power on the Commonwealth to make, vary or administer an arrangement or grant) and section 39B (which confers power on the Commonwealth to form a company, participate in the formation of a company, acquire shares in a company, or become a member of a company).
2. Section 32B of the Principal Act relevantly provides: "If ... apart from this subsection, the Commonwealth does not have power to make, vary or administer ... an arrangement ... or grant ... and ... the arrangement or grant ... is specified in the regulations ... the Commonwealth has power to make, vary or administer the arrangement or grant ...".
3. Section 39B of the Principal Act contains similar words in relation to the specified activities in respect of a company.
4. The Bill would amend each section to remove words that may be construed as limiting the relevant power: "If ... apart from this subsection, the Commonwealth does not have power to" make, vary or administer the arrangement or grant, or to engage in one of the specified activities in relation to a company.
5. The framework established by the Principal Act and the Financial Framework (Supplementary Powers) Regulations 1997 (FFSP Regulations) (the FFSP framework) has operated as a source of legislative authority for Commonwealth spending (via arrangements and grants), even in situations where the spending may have been supported by a general spending power in other legislation. The FFSP framework has been used to support a broad range of spending, including emergency payments during the COVID-19 pandemic, and the 2020 bushfires and floods.
6. The amendments will put beyond doubt that the FFSP framework operates consistently with how it has been understood to operate in circumstances where another general power may be available. The amendments would clarify the operation of the FFSP framework and put beyond doubt the validity of government spending programs that rely on section 32B of the Principal Act, as well as any government involvement in companies in reliance on section 39B of the Principal Act, in circumstances where other general powers could also be relied on.
7. The amendments to sections 32B and 39B would commence prospectively and the Bill would include validation provisions to regularise the status of past spending and government activity in reliance on sections 32B and 39B, in the event that any such past spending or activity may not have been valid by reason of there having been an alternative source of power. The validation provisions would not adversely affect any person.
FINANCIAL IMPACT
8. The Bill has no financial impact.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
9. The Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
10. The full Statement of Compatibility with Human Rights is attached to the end of this explanatory memorandum.
NOTES ON CLAUSES
Preliminary
The amendments would ensure that the Principal Act operates as it has been understood to operate. They would also regularise the status of past spending (and other activities) that may not have been authorised by the Act because of the words that the amendments would remove. Accordingly, the Bill is intended to provide certainty that spending and other activities, where appropriately set out in the FFSP Regulations (eg in the form of a program), are supported by the Principal Act (whether or not they might also be supported by other Commonwealth legislation). This clarifies that these powers can be exercised where other general powers are available.
Clause 1—Short title
1. This is a formal provision specifying the short title of the Act.
Clause 2—Commencement
2. The table in this clause provides for the commencement of each provision in the Bill, as set out in the table.
Clause 3—Schedules
3. This clause gives effect to the provisions in the Schedule to the Bill.
Schedule 1—Amendments
Part 1—Main amendments
Financial Framework (Supplementary Powers) Act 1997
Items 1 and 2 Section 2A
4. The amendments made by items 1 and 2 are technical amendments to improve the readability of section 2A.
Item 3 Section 32B
5. This item repeals section 32B and substitutes an amended provision.
6. These amendments to section 32B provide clarity as to the operation of the power conferred by that provision to engage in spending (via an arrangement or grant) in circumstances where other powers to engage in spending (including in other Acts) may also be available. The amendment makes clear that section 32B provides legislative authority for spending that falls within its terms, even if it is possible that the Commonwealth could engage in that spending under some other general spending power.
Item 4 Subsections 39B(1) and (2)
7. This item repeals subsections 39B(1) and (2) and substitutes amended provisions.
8. These amendments to section 39B provide clarity as to the operation of the power conferred by that provision to undertake activities such as forming a company or acquiring shares in a company, in circumstances where other powers to do those activities (including in other Acts) may also be available. The amendment makes it clear that section 39B provides legislative authority for those activities, even if it is possible that the Commonwealth could engage in them under some other general power.
Part 2—Consequential amendments
Asbestos and Silica Safety and Eradication Agency Act 2013
Item 5 Subsection 8(5)
9. This item repeals subsection 8(5) of the Asbestos and Silica Safety and Eradication Agency Act 2013 (Asbestos Act) (including the note) which would become redundant after the amendments to section 32B of the Principal Act.
10. Subsection 8(5) relates to the relationship between the provisions of the Asbestos Act relating to the new functions which will be conferred on the Asbestos and Silica Safety and Eradication Agency, and the Principal Act. It provides that the power of the Commonwealth to spend amounts under section 8 must be disregarded for the purpose of paragraph 32B(1)(a) of the Principal Act. This provision is directed to the words that the Bill would remove from section 32B. Accordingly, the provision would no longer be required after the amendment to the Principal Act. Further, the reference to paragraph 32B(1)(a) would no longer be correct.
11. This is a technical amendment and does not otherwise affect the operation of the Asbestos Act.
Biosecurity Act 2015
Item 6 Section 614E
12. This item repeals section 614E of the Biosecurity Act 2015 (Biosecurity Act) which is redundant after the amendments to section 32B of the Principal Act.
13. Section 614E relates to the relationship of Part 3A of the Biosecurity Act with other Acts and provides that the spending powers in that Part do not, by implication, limit the operation of the Principal Act. This provision would no longer be required after the amendment, which would sufficiently clarify the relationship between section 32B and the spending powers in Part 3A (ie both may be available to support particular spending).
14. This is a technical amendment and does not otherwise affect the operation of the Biosecurity Act.
Disability Services and Inclusion Act 2023
Item 7 Section 12
15. This item makes minor technical changes to the simplified outline which relate to item 8 below.
Item 8 Section 17
16. This item repeals section 17 of the Disability Services and Inclusion Act 2023 (DSI Act), and substitutes an amended provision.
17. While provisions in other Acts that address their relationship with section 32B of the Principal Act will no longer be necessary in view of the clarification provided by the Bill, the position is different for the DSI Act. Even after section 32B is amended, to avoid doubt it will remain necessary to clarify the intended interaction between the spending powers in the DSI Act and spending powers in other Acts, including section 32B. That is because, unlike the other Acts that will be consequentially amended by this Bill, the DSI Act might be construed as an exhaustive code in respect of the spending that it authorises (in the absence of any clarification). The provision to be inserted by this item will provide that clarification by providing that the DSI Act is not intended to be construed in that way in relation to any other law of the Commonwealth (including section 32B).
Industry Research and Development Act 1986
Item 9 Section 37 (heading) and item 10 Subsection 37(1)
18. These items make minor technical changes to the section heading title and the number of the section which are consequential to item 11 below.
Item 11 Subsection 37(2)
19. This item repeals subsection 37(2) of the Industry Research and Development Act 1986 (IRD Act) which is redundant after the amendments to section 32B of the Principal Act.
20. Section 37 relates to the relationship of Part IV of the IRD Act with other Acts and relevantly provides that the spending powers in that Part do not, by implication, limit the operation of the Principal Act. This provision is no longer required after the amendment, which sufficiently clarifies the relationship between section 32B and the spending powers in Part 3A. Both powers are independent of, and do not limit, one another, and so both powers would be available to support particular spending.
21. This is a technical amendment and does not otherwise affect the operation of the IRD Act.
Research Involving Human Embryos Act 2002
Item 12 Section 46C (heading) and item 13 Subsection 46C(1)
22. These items make minor technical changes to the section heading title and the number of the section which are consequential to item 14 below.
Item 14 Subsection 46C(2)
23. This item repeals subsection 46C(2) of the Research Involving Human Embryos Act 2002 (RIHE Act) which becomes redundant after the amendments to section 32B of the Principal Act.
24. Section 46C relates to the relationship of Division 6 of the RIHE Act with other Acts and relevantly provides that the spending powers in that Division do not, by implication, limit the operation of the Principal Act. This provision would no longer be required after the amendment, which would sufficiently clarify the relationship between section 32B and the spending powers in Division 6. Both powers are independent of, and do not limit, one another, and so both powers would be available to support particular spending.
25. This is a technical amendment and does not otherwise affect the operation of the RIHE Act.
Social Security Act 1991
Item 15 Subsection 1062A(5B)
26. This item repeals subsection 1062A(5B) of the Social Security Act 1991 (Social Security Act) which becomes redundant after the amendments to section 32B of the Principal Act.
27. Subsection 1062A(5B) relates to the relationship between Chapter 2D of the Social Security Act and the Principal Act. It provides that the power of the Commonwealth to make, vary or administer an arrangement or grant in Chapter 2D must be disregarded for the purpose of paragraph 32B(1)(a) of the Principal Act. This provision is directed to the words that the Bill would remove from section 32B. Accordingly, the provision is no longer required after the amendment to the Principal Act. Further, the reference to paragraph 32B(1)(a) is no longer correct.
28. This is a technical amendment and does not otherwise affect the operation of the Social Security Act.
Water Act 2007
Item 16 Section 86ADA
29. This item repeals section 86ADA of the Water Act 2007 (Water Act) which becomes redundant after the amendments to section 32B of the Principal Act.
30. Section 86ADA relates to the relationship between Part 2AA of the Water Act and the Principal Act. It provides that the power of the Commonwealth to make, vary or administer a payment, arrangement or grant in Part 2A must be disregarded for the purpose of paragraph 32B(1)(a) of the Principal Act. This provision is directed to the words that the Bill would remove from section 32B. Accordingly, the provision would no longer be required after the amendment to the Principal Act. Further, the reference to paragraph 32B(1)(a) is no longer correct.
31. This is a technical amendment and does not otherwise affect the operation of the Water Act.
Part 3—Contingent amendments
Administrative Review Tribunal Act 2024
Item 17 Subsection 59(4) and Item 18 Subsection 294(10)
32. This item repeals subsections 59(4) and 294(10) (including the notes) which would become redundant after the amendments to section 32B of the Principal Act.
33. Subsection 59(4) relates to the relationship between the provisions of the Administrative Review Tribunal Act 2024 (ART Act) relating to the payment of costs in which the Attorney-General is a party, and the Principal Act. It provides that the power of the Commonwealth to make a payment, or to make, vary or administer an arrangement or grant must be disregarded for the purpose of paragraph 32B(1)(a) of the Principal Act. This provision is directed to the words that the Bill would remove from section 32B. Accordingly, the provision would no longer be required after the amendment to the Principal Act. Further, the reference to paragraph 32B(1)(a) would no longer be correct.
34. Subsection 294(10) relates to the relationship between the provisions of the ART Act relating to the payment of financial assistance authorised by the Attorney-General, and the Principal Act. It provides that the power of the Commonwealth to make a payment, or to make, vary or administer an arrangement or grant must be disregarded for the purpose of paragraph 32B(1)(a) of the Principal Act. This provision is directed to the words that the Bill would remove from section 32B. Accordingly, the provision would no longer be required after the amendment to the Principal Act. Further, the reference to paragraph 32B(1)(a) would no longer be correct.
35. These are technical amendments and do not otherwise affect the operation of the ART Act.
Australian Research Council Act 2001
Item 19 Section 57
36. This item repeals section 57 of the Australian Research Council Act 2001 (ARC Act) which would become redundant after the amendments to section 32B of the Principal Act.
37. Section 57 relates to the relationship of the provisions of the ARC Act relating to grants of financial assistance for research programs with other Acts and relevantly provides that the power to approve the making of a grant of financial assistance to an organisation must be disregarded for the purpose of paragraph 32B(1)(a) of the Principal Act. This provision is directed to the words that the Bill would remove from section 32B. Accordingly, the provision would no longer be required after the amendment to the Principal Act. Further, the reference to paragraph 32B(1)(a) would no longer be correct.
38. This is a technical amendment and does not otherwise affect the operation of the ARC Act.
Part 4—Validation and saving provisions
Item 20 Validation—arrangements etc
39. This item regularises the position in respect of spending in which the Commonwealth has previously engaged in reliance on section 32B, in the event that section 32B may not have been available to support that spending merely because of the availability of another spending power. This ensures that there is no uncertainty in relation to the legal status of that past spending.
40. From the date of commencement, the validation provisions, including for items 22 and 23 below, validate past spending which may have been authorised under an item specified in the FFSP Regulations when it might also have been authorised under an alternative legislation. This confirms the existing and historical application of the FFSP framework that provides that more than one source of legislative authority may be valid at the same time. The changes are wholly beneficial in operation by negating any risk of invalidity of payments.
Item 21 Saving—arrangements etc
41. This item ensures that Regulations made for the purposes of section 32B of the Principal Act that are in force immediately before the commencement of the Bill continue in force as if made for the purpose of section 32B as amended by the Bill.
Item 22 Validation—formation of a company etc
42. This item regularises the position in respect of any actions by the Commonwealth in forming or participating in the formation of a company in reliance on section 39B, in the event that section 39B may not have been available to support those actions merely because of the availability of another power. This ensures that there is no uncertainty in relation to the legal status of those actions.
43. The potential retrospective impact of this provision is addressed at item 20 above.
Item 23 Validation—acquisition of shares in company etc
44. This item regularises the position in respect of any actions by the Commonwealth in acquiring shares in or becoming a member of a company in reliance on section 39B, in the event that section 39B may not have been available to support those actions merely because of the availability of another power. This ensures that there is no uncertainty in relation to the legal status of those actions.
45. The potential retrospective impact of this provision is addressed at item 20 above.
Item 24 Saving—companies etc
46. This item ensures that Regulations made for the purposes of section 39B of the Principal Act that are in force immediately before the commencement of the Bill continue in force as if made for the purpose of section 39B as amended by the Bill.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
FINANCIAL FRAMEWORK (SUPPLEMENTARY POWERS) AMENDMENT BILL 2024
1. This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Bill
2. This Bill would amend the Financial Framework (Supplementary Powers) Act 1997 to remove a possible limitation from section 32B (which confers on the Commonwealth the power to make, vary or administer an arrangement or grant) and section 39B (which confers on the Commonwealth the power to form a company, participate in the formation of a company, acquire shares in a company, or become a member of a company). The Bill would amend each section to remove words that may limit the relevant power: "If ... apart from this subsection, the Commonwealth does not have power to" make, vary or administer the arrangement or grant, or engage in a relevant activity in relation to a company. This would clarify that these powers can be exercised where other general powers are available.
3. The amendments are required to ensure that the provisions operate in the manner in which they are widely understood and presently intended to operate.
4. The amendments would include a validation provision which would regularise the status of spending in which the Commonwealth has previously engaged in reliance on section 32B, in the event that the provision may not have been available to support that spending by reason of there having been an alternative source of power (including in another Act). This ensures that there is no uncertainty in relation to the legal status of that past spending, so that no further action will need to be taken. The validation provision would provide that in such cases the Commonwealth is, from the commencement of the Bill, taken to have had the necessary power under section 32B at relevant times in the past. The Bill would make similar provision in respect of the legal status of any past activities that relied on section 39B.
Human rights implications
5. The Bill does not engage any of the human rights or freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. Consequently, the Bill is compatible with those human rights and freedoms.