Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon. Josh Frydenberg MP)
Chapter 21 Appropriation (Coronavirus Economic Response Package) Bill (No. 1) 2019-2020
Outline of chapter
21.1 The Appropriation (Coronavirus Economic Response Package) Bill (No. 1) 2019-2020 (the Appropriation Bill No. 1) proposes appropriations from the Consolidated Revenue Fund for the ordinary annual services of the Government in addition to amounts appropriated through the Appropriation Act (No. 1) 2019-2020 and the Supply Act (No. 1) 2019-2020.
Context of amendments
21.2 Appropriations for the ordinary annual services of the Government must be contained in a separate Bill from other appropriations in accordance with sections 53 and 54 of the Australian Constitution. Consequently, the Appropriation Bill No. 1 proposes appropriations for the ordinary annual services of the Government. Other annual appropriations that are not for the ordinary annual services of the Government are proposed in the Appropriation Bill No. 2.
Summary of new law
21.3 The Appropriation Bill No. 1 provides for the appropriation of specified amounts for expenditure by Australian Government entities, primarily being non-corporate Commonwealth entities (non-corporate entities) under the PGPA Act.
Detailed explanation of new law
21.4 Portfolio statements are defined in the Appropriation Bill No. 1 to mean the Portfolio Budget Statements 2019-20 and the Portfolio Additional Estimates Statements tabled in relation to the Bill for the Appropriation Act (No. 3) 2019-2020 and the Bill for the Appropriation Act (No. 4) 2019-2020. [Clause 3 of the Appropriation Bill No. 1]
21.5 Portfolio statements are relevant documents under paragraph 15AB(2)(g) of the Acts Interpretation Act, which provides for material to be considered in the interpretation of an Act if the material is declared by the Act to be relevant material for the purposes of section 15AB of the Acts Interpretation Act. [Clause 4 of the Appropriation Bill No. 1]
21.6 The purpose of the portfolio statements is to provide information on the proposed allocation of resources to Government outcomes by Commonwealth entities within each portfolio.
Notional transactions between entities that are part of the Commonwealth
21.7 Notional transactions between non-corporate entities are to be treated as if they are real transactions. [Clause 5 of the Appropriation Bill No. 1]
21.8 Notional transactions, therefore, require the debiting of an appropriation made by Parliament. The payments of the amounts in Schedule 1 from one non-corporate entity to another do not require, in a constitutional sense, an appropriation, because both non-corporate entities operate within the Consolidated Revenue Fund. For reasons of financial discipline and transparency, the practice has arisen for these payments between non-corporate entities to be treated as though they required an appropriation, and to debit an appropriation when such notional payments are made. This is consistent with section 76 of the PGPA Act.
21.9 When a non-corporate entity makes a payment, whether to another non-corporate entity or another part of the same non-corporate entity (such as a different 'business unit' within the entity), it is to be treated as a 'real' payment. This means that the appropriation made by Parliament is extinguished by the amount of the notional payment, even though no payment is actually made from the Consolidated Revenue Fund. Similarly, a notional receipt in such a situation is to be treated by the receiving non-corporate entity (where relevant) as if it were a real receipt. This does not mean every internal transfer of public money involves a notional payment and receipt.
21.10 The total of the appropriations in Schedule 1 of the Appropriation Bill No. 1 is $1,6251,133,000. The amounts in Schedule 1 may be increased by a determination under clause 10 (Advance to the Finance Minister). [Clause 6 of the Appropriation Bill No. 1]
21.11 The amounts in Schedule 1 of the Appropriation Bill No. 1 may be adjusted further in accordance with sections 74 to 75 of the PGPA Act. Specifically:
- Section 74 of the PGPA Act, when read with Rule 27 of the Public Governance, Performance and Accountability Rule 2014 , permits non-corporate entities to retain certain types of receipts by adding them to their most recent departmental item or other type of appropriation in an Appropriation Act when prescribed.
- Appropriations may be adjusted by amounts recoverable by a non-corporate entity from the ATO for GST, in accordance with section 74A of the PGPA Act. The amounts specified in Schedule 1 exclude recoverable GST. The appropriations shown represent the net amount that Parliament is asked to allocate to particular purposes.
- Section 74A has the effect of increasing an appropriation by the amount of the GST qualifying amount arising from payments in respect of the appropriation. As a result, there is sufficient appropriation for payments under an appropriation item, provided that the amount of those payments, less the amount of recoverable GST, can be met from the initial amount shown against the item in Schedule 1. Section 74A also applies to notional transactions between and within non-corporate entities.
- Items may be adjusted to take into account the transfer of functions between non-corporate entities, in accordance with section 75 of the PGPA Act. It is possible that adjustments under section 75 may result in new items and/or outcomes being created in an Appropriation Act.
21.12 Additionally, the Finance Minister manages the payment from items in the Appropriation Bill No. 1 by non-corporate entities using a discretionary power under section 51 of the PGPA Act. Section 51 allows the Finance Minister to manage the timing and the amount of appropriated money to be made available to a Commonwealth entity (an entity as defined in section 10 of the PGPA Act, except as required by law.
21.13 A departmental item is defined to mean the total amount set out in Schedule 1 to the Appropriation Bill No. 1 in relation to a non-corporate entity under the heading 'Departmental'. Expenditure means payments for expenses, acquiring assets, making loans or paying liabilities. [Clause 3 of the Appropriation Bill No. 1]
21.14 The amount specified in a departmental item for a non-corporate entity may be applied for the departmental expenditure of the non-corporate entity. [clause 7 of the Appropriation Bill No. 1]
21.15 While the departmental items in Schedule 1 to the Appropriation Bill No. 1 may be divided between outcomes, the different amounts against outcomes are notional. The total appropriation for departmental expenses represents the departmental item.
21.16 Departmental items involve costs over which a non-corporate entity has control. Departmental appropriations can be used to make any payment related to the functions of the non-corporate entity including on purposes covered by other items whether or not they are in the Act for an entity. Expenditure typically covered by departmental items includes:
- employee expenses, suppliers and other operational expenses (e.g. interest and finance expenses); and
- the acquisition and capitalised maintenance of departmental assets valued at $10 million or less.
21.17 The cash to meet departmental expenses may be required at times other than when the expenses are incurred. Departmental items are available until they are spent, or until the Act through which they were appropriated is repealed. Annual Appropriation Acts have a lifespan of up to three years after which they automatically repeal.
21.18 Generally, if non-corporate entities are directed by Government to perform additional activities, they are expected to meet the cost of the additional activities from their existing appropriations, which may then be replenished by a departmental appropriation in the following financial year. This is known as supplementation and applies when the direction was given, or a decision to propose further appropriations is made, in a timeframe within which it is not practicable to include the expected expenses in a further Appropriation Bill for that financial year.
21.19 There can also be occasions when a non-corporate entity, such as a portfolio Department, is required to assist with matters in relation to other areas of the Government. Examples can include whole-of-Government activities or a portfolio Department assisting with the formation and initial costs of a new portfolio body (for which the Department might later be supplemented). Another example would be where government has decided to implement shared services arrangements, and one non-corporate entity is providing corporate services assistance to another non-corporate entity.
21.20 The Appropriation Bill No. 1 also provides for the appropriation of administered amounts to be applied by a non-corporate entity for the purpose of contributing to the outcome for a non-corporate entity. [Subclause 8(1) of the Appropriation Bill No. 1]
21.21 Administered item is defined as the amount set out in Schedule 1 opposite an outcome for a non-corporate entity under the heading 'Administered'. Administered amounts are appropriated separately for each outcome, so, unlike departmental items, the split across outcomes is not notional. This makes it clear what the funding is intended to achieve. [Clause 3 of the Appropriation Bill No. 1]
21.22 The appropriations for administered items in Schedule 1 represent the amounts required to meet the additional estimated expenses for the administered outcomes for 2019-2020.
21.23 The Appropriation Bill No. 1 also sets out the purposes for which each administered item can be spent. Where the portfolio statements indicate a particular activity is in respect of a particular outcome, then expenditure on that activity is taken to be expenditure for the purpose of contributing to achieving that outcome. [Subclause 8(2) of the Appropriation Bill No. 1]
21.24 Administered items are those administered by a non-corporate entity on behalf of the Government (e.g. certain grants, benefits and transfer payments). These payments are usually made pursuant to eligibility rules and conditions established by the Government or the Parliament. Specifically, administered items are tied to outcomes (departmental items are not).
Corporate entity items
21.25 Appropriations of money for corporate entities are to be paid from the Consolidated Revenue Fund by the relevant Department. Payments for corporate entities must be used for the purposes of those entities. [Clause 9 of the Appropriation Bill No. 1]
21.26 A corporate entity is defined to be a corporate Commonwealth entity or a Commonwealth company within the meaning of the PGPA Act. [Clause 3 of the Appropriation Bill No. 1]
21.27 Many corporate entities receive funding from appropriations. However, these entities are legally separate from the Commonwealth, and as a result, do not debit appropriations or make payments from the Consolidated Revenue Fund.
21.28 Corporate entity payments are initiated by requests to the relevant portfolio Departments from the corporate entity. The Finance Minister manages appropriations for corporate entities through a discretionary power to control the timing and amount made available under section 51 of the PGPA Act, except as required by law. Corporate entities hold the amounts paid to them on their own account.
21.29 If a corporate entity is subject to another Act that requires amounts appropriated by Parliament for the purposes of that entity to be paid to the entity, then the full amount of the corporate entity payment must be paid to the entity. The purpose of this is to clarify that the new law is not intended to qualify any obligations in other legislation regulating a corporate entity, where that other legislation requires the Commonwealth to pay the full amount appropriated for the purposes of the entity. [Subclause 9(2) of the Appropriation Bill No. 1]
21.30 In addition to the annual appropriations, some corporate entities may also receive public money from related entities such as a portfolio Department and from special appropriations managed by those Departments. Many corporate entities also receive funds from external sources.
Advance to the Finance Minister
21.31 The Finance Minister may allocate additional amounts for items when satisfied that there is an urgent need for expenditure and the existing appropriation in the current year is not provided for or is insufficiently provided for. The allocated amount is referred to as the Advance to the Finance Minister. [Clause 10 of the Appropriation Bill No. 1]
21.32 The maximum total of amounts that can be determined under the Advance to the Finance Minister provision is $800 million. [Subclause 10(3) of the Appropriation Bill No. 1]
21.33 This provides the Finance Minister with capacity to allocate additional amounts for the Coronavirus expenditures that were not contemplated when preparing the Appropriation Bill No. 1.
21.34 The quantum of the Advance to the Finance Minister provision has been determined by extrapolating the Coronavirus related Advances to the Finance Minister approved since the beginning of March 2020 through until the end of the 2019 20 financial year. The quantum of the Advance to the Finance Minister also takes into consideration the evolving nature of the Coronavirus outbreak, the associated uncertainty around what may be required as part of the Government's response and the likely need for the Government to act quickly. While this new Advance to the Finance Minister provision is significant, it will be limited to the Coronavirus response requirements only (including responses to health and economic impacts).
21.35 The proposed Advance to the Finance Minister is in addition to the ordinary Advance to the Finance Minister provided through the Annual Appropriations Acts of $295 million for Appropriation Bill No. 1 and $380 million for Appropriation Bill No. 2. These ordinary Advance to the Finance Minister provisions are intended to meet urgent expenditure associated with the ongoing operations of Government which will continue throughout the Coronavirus response.
21.36 The Finance Minister will only consider issuing an amount if satisfied there is an urgent need for expenditure that is not provided for, or is insufficiently provided for, in Schedule 1 because of an omission or understatement or because of unforeseen circumstances. Generally, options under sections 74 to 75 of the PGPA Act must be considered, where applicable, before the Finance Minister will make a determination. [Subclause 10(1) of the Appropriation Bill No. 1]
21.37 The Finance Minister may make a determination to allocate an amount from the Advance to the Finance Minister to an existing item in Schedule 1 to:
- a new item not already in Schedule 1; or
- a new outcome.
[Subclause 10(2) of the Appropriation Bill No. 1]
21.38 Such a determination is a legislative instrument, which must be tabled in Parliament. [Subclause 10(4) of the Appropriation Bill No. 1]
21.39 The determinations are not subject to disallowance under section 42 of the Legislation Act 2003 as this would frustrate the purpose of the provision, which is to provide additional appropriation for urgent expenditure. Further, an Advance to the Finance Minister does not sunset. Legislative instruments enabled by the Bill, once enacted, automatically repeal when the Act itself repeals. [Clause 13 of the Appropriation Bill No. 1]
Crediting Amounts to Special accounts
21.40 Special accounts may be established under the PGPA Act by a determination of the Finance Minister (section 78) that is disallowable by Parliament or by another Act (sections 79 and 80). The determination or Act that establishes the special account will specify the purposes of the special account.
21.41 If the purpose of an item in Schedule 1 to the Appropriation Bill No. 1 is also the purpose of a special account (regardless of whether the item expressly refers to the special account), then amounts may be debited against the appropriation for that item and credited to the special account. [Clause 11 of the Appropriation Bill No. 1]
Appropriations of the Consolidated Revenue Fund
21.42 The Consolidated Revenue Fund is appropriated as necessary for the purposes of the Appropriation Bill No. 1. [clause 12 of the Appropriation Bill No. 1]
21.43 Significantly, this means that there is an appropriation in law when the Act commences. That is, the appropriations are not made or brought into existence just before they are paid, but when the Act commences. This indicates that the amounts appropriated may be affected by the PGPA Act, in particular sections 74 to 75, after the Act commences.
Schedule 1 - Services for which money is appropriated
21.44 Schedule 1 to the Appropriation Bill No. 1 specifies the appropriations proposed for the ordinary annual services of the Government. It contains a summary table which lists the total amounts for each portfolio. A separate summary table is included for each portfolio, with other tables detailing the appropriations for each Commonwealth entity. [Schedule 1 to the Appropriation Bill No. 1]
21.45 Schedule 1 to the Appropriation Bill No. 1 includes, for information purposes, the amount appropriated in the Appropriation Act (No. 1) 2019-2020 and the Supply Act (No. 1) 2019-2020 , which is printed in italics and labelled as 'Budget Appropriation (italic figures) - 2019-2020', and a figure for the previous financial year labelled 'Actual Available Appropriation (light figures) - 2018-2019'. The Budget Appropriation and Actual Available Appropriation are estimates that do not affect the amount available at law. These figures provide a comparison with the proposed appropriations.
21.46 The Budget Appropriation and Actual Available Appropriation are calculated for each item by adding the amounts appropriated in the relevant financial year's annual Appropriation Acts, plus any Advances to the Finance Minister, and any adjustments under sections 51 and 75 of the PGPA Act. In some instances, the figures may also be affected by limits applied administratively by the Department of Finance. In addition, where an entity's outcome structure has changed since the last Appropriation Act, only ongoing outcomes may be shown in the Appropriation Bill No. 1. For these reasons, the Actual Available Appropriation figures may be different from the sum of amounts provided in earlier Appropriation Acts.
Decisions included in the Appropriation Bill No. 1
21.47 The Appropriation Bill No. 1 proposes appropriations totalling $1.651 billion.
21.48 The majority of appropriations proposed in the Bill are for the Department of Education, Skills and Employment, the Department of Health and the Department of Infrastructure, Transport, Regional Development and Communications. Specific items for these entities are detailed below:
- the Department of Education, Skills and Employment ($273.6 million) including:
- $188.6 million, to provide support for small businesses to retain their apprentices and trainees by providing a wage subsidy of 50 per cent of the apprentices' or trainees' wage, capped at $7,000 per quarter per eligible apprentice, for up to nine months from 1 January 2020 to 30 September 2020. This measure will support up to 70,000 businesses, employing around 117,000 apprentices and trainees; and
- $85.0 million to provide the Employment Services program with sufficient funding to meet potential demands.
- the Department of Health ($571.6 million) including:
- $234.9 million to ensure continuity of the aged care workforce for residential and home care;
- $113.5 million to establish and operate dedicated respiratory clinics to assist with diagnosing and managing respiratory cases, including the Coronavirus, influenza, and pneumonia;
- $69.1 million to support a key public health national information campaign;
- $48.0 million will be provided to support aged care providers experiencing the Coronavirus outbreak;
- $29.1 million to support remote communities to minimise exposure through planning and preparedness activities, early retrieval and evacuation of at risk patients, and emergency support in the event of acute the Coronavirus outbreak;
- $18.0 million establish a Central Patient Coronavirus Triage Hotline to advise people whether to attend a hospital, clinic, to self-isolate at home, to consult a General Practitioner or to take no further action;
- $13.4 million to contract expert training providers to train staff in medical clinics and the broader primary care sector;
- $12.5 million for pharmacy businesses to fill prescriptions and deliver them to homes of eligible Coronavirus patients and other at-risk populations in self-isolation;
- $9.1 million additional resourcing for the National Incident Room to respond to the Coronavirus;
- $5.1 million to provide pathology testing for the Coronavirus in aged care facilities;
- $5.0 million to accelerate implementation of electronic prescribing (ePrescribing) used by clinicians to prescribe medicines and share prescriptions electronically with a patient's pharmacy;
- $5.0 million to temporarily boost the health workforce in Australia during the Coronavirus outbreak;
- $2.8 million for the expansion of existing surveillance, modelling and data activities to include the Coronavirus; and
- $6.1 million to support the continuity of the aged care work force and additional funding for the My Aged Care contact centre.2.8
- The Department of Infrastructure, Transport, Regional Development and Communications ($437.0 million) for airline relief including:
- $250.0 million in relation to the waiver of Airservices Australia charges for domestic airlines;
- $108.0 million for domestic aviation security rebates to airlines;
- $33.0 million for enhanced regional aviation security requirements at regional airports;
- $31.0 million for relief from aviation fuel tax for airlines; and
- the Civil Aviation Safety Authority ($15.0 million) to continue to deliver aviation safety activities.
21.49 The Appropriation Bill No. 1 also proposes appropriations totalling $268.9 million for the following entities:
- Services Australia ($221.0 million) to facilitate stimulus and other payments, and to meet the cost of processing additional Medicare benefits as part of COVID 19 pathology testing;
- the Department of Home Affairs ($18.7 million) to manage detention and quarantine facilities on Christmas Island and in the Northern Territory and other measures in response to the Coronavirus outbreak;
- the Department of Agriculture, Water and the Environment ($15.3 million) to support increased biosecurity officer interventions to contain and slow the transmission of the Coronavirus;
- the Department of Foreign Affairs and Trade ($10.6 million) to reimburse costs associated with QANTAS charter flights and additional consular support costs;
- the Aged Care Quality and Safety Commission ($2.7 million) to support aged care providers to implement infection control measures; and
- the Department of Veterans' Affairs ($0.6 million) to facilitate stimulus payments to eligible Department of Veterans' Affairs clients.
Application and transitional provisions
21.50 The Appropriation Bill No. 1 commences as an Act on the day the Bill receives Royal Assent. [Clause 2 of the Appropriation Bill No. 1]
21.51 The Appropriation Bill No. 1, once enacted, will repeal at the start of 1 July 2022. [Clause 13 of the Appropriation Bill No. 1]
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