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2022
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SUPPLY BILL (NO. 4) 2022-2023
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance,
Senator the Honourable Katy Gallagher)
Table of Acronyms and Defined Terms
AAA Actual Available Appropriation
AAO Administrative Arrangements Order
AFM Advance to the Finance Minister
AI Act Acts Interpretation Act 1901
Commonwealth An entity as defined in section 10 of the PGPA Act
entity
corporate entity A corporate Commonwealth entity or a
Commonwealth company within the meaning of the
PGPA Act
CRF Consolidated Revenue Fund
Finance Minister Minister for Finance
GST Goods and Services Tax
non-corporate A non-corporate Commonwealth entity as defined in
entity the PGPA Act, or the High Court of Australia
PGPA Act Public Governance, Performance and Accountability
Act 2013
portfolio Portfolio Budget Statements
statements
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
House of Representatives 1
Outline
Supply Bill (No. 4) 2022-2023
General Outline
1 This Explanatory Memorandum accompanies the Supply Bill (No. 4)
2022-2023 (the Bill).
2 The main purpose of the Bill is to propose appropriations from the
Consolidated Revenue Fund (CRF) for services that are not the ordinary annual
services of the Government.
3 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 (the Constitution).
Consequently, the Bill proposes appropriations broadly equivalent to 7/12ths of
the estimated 2022-23 annual appropriations for the services that are not the
ordinary annual services of the Government. The Bill proposes lesser
appropriations for certain entities which received more than 5/12ths of their
annual appropriations in the Supply Act (No. 2) 2022-2023, mainly for the purpose
of managing disproportionately high expenditure early in the financial year or to
support the continuing COVID-19 response. Further details of the amounts
proposed in the Bill are outlined in the Notes on clauses section of this
Explanatory Memorandum (under Schedule 2--Services for which money is
appropriated).
4 Annual appropriations for the services that are not the ordinary annual
services of the Government for the balance of 2022-23, being an amount broadly
equivalent to 5/12ths of those appropriations, have been provided through the
Supply Act (No. 2) 2022-2023. Following convention, supply appropriations are
being provided to ensure continuity of the ongoing business of the Government
and exclude funding for new Budget measures.
5 Annual appropriations to support the delivery of new measures announced
by the Government in the October 2022 Budget are proposed in the Appropriation
Bill (No. 2) 2022-2023. These new measures include the Government's 2022
election commitments and selected measures from the March 2022 Budget
endorsed by the Government.
6 The Bill also reflects the revised allocation of policy matters and legislation
responsibilities among portfolios, in line with the Administrative Arrangements
Order which commenced on 1 July 2022. For example, the Bill contains
appropriations for two Departments which were established on 1 July 2022. These
are the Department of Employment and Workplace Relations and the Department
of Climate Change, Energy, the Environment and Water.
7 The October 2022-23 Portfolio Budget Statements (portfolio statements),
which aid the interpretation of the Appropriation Bills (Nos. 1 and 2) 2022-2023
also cover appropriations included in the Supply Acts (Nos. 1 and 2) 2022-2023
and Supply Bills (Nos. 3 and 4) 2022-2023, thus presenting a complete view of
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
House of Representatives 2
Outline
the proposed expenditure for the 2022-23 financial year. This Explanatory
Memorandum should be read in conjunction with the various portfolio statements,
which contain details of appropriations set out in the Schedules to the Bill.
Structure of the Bill
8 The Bill provides for the appropriation of specified amounts for expenditure
by Australian Government entities, primarily being non-corporate Commonwealth
entities (non-corporate entities) under the Public Governance, Performance and
Accountability Act 2013 (PGPA Act).
9 Part 1 of the Bill deals with definitions, the interpretative role of the
portfolio statements and the concept of notional transactions. Part 2 of the Bill
proposes appropriations to make payments of the amounts in Schedule 2 for State,
ACT, NT and local government items (clause 7), administered items (clause 8),
administered assets and liabilities items (clause 9), other departmental items
(clause 10) and corporate entity items (clause 11).
10 Part 3 of the Bill deals with credits to special accounts (clause 12), the
conditions applying to payments to State, ACT, NT and local government items
(clause 13 and Schedule 1), provides for amounts to be appropriated as necessary
(clause 14), and specifies when the Bill is repealed (clause 15).
11 The Bill does not contain an Advance to the Finance Minister (AFM)
provision or debit limits for the general purpose financial assistance and national
partnership payments as specified in the Federal Financial Relations Act 2009.
Financial Impact
12 The Bill, if enacted, would appropriate the amounts specified in Schedule 2
as set out in clause 6.
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
House of Representatives 3
Statement of Compatibility with Human Rights
Statement of Compatibility with Human Rights
1 The Bill seeks to appropriate money for services that are not considered to
be the ordinary annual services of the Government.
2 Accordingly, the Bill performs an important constitutional function, by
authorising the withdrawal of money from the CRF for the broad purposes
identified in the Bill.
3 However, as the High Court has emphasised, beyond this, the Appropriation
Acts do not create rights and nor do they, importantly, impose any duties.
4 Given that the legal effect of Appropriation Acts is limited in this way, the
Bill is not seen as engaging, or otherwise affecting, the rights or freedoms relevant
to the Human Rights (Parliamentary Scrutiny) Act 2011.
5 Detailed information on the relevant appropriations, however, is contained
in the portfolio statements.
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
House of Representatives 4
Notes on clauses
Notes on clauses
Part 1--Preliminary
Clause 1--Short title
1 Clause 1 specifies that the short title of the Bill, once enacted, will be the
Supply Act (No. 4) 2022-2023.
Clause 2--Commencement
2 Clause 2 provides for the Bill to commence as an Act on the day of the
Royal Assent.
Clause 3--Definitions
3 Subclause 3(1) defines the key terms used in the Bill, such as "administered
item", "non-corporate entity", and "State, ACT, NT and local government item".
4 Subclause 3(2) confirms that, for the purposes of other laws, the Bill when
enacted is to be regarded as an Appropriation Act.
Clause 4--Portfolio statements
5 Clause 4 declares that the portfolio statements are relevant documents for
the purposes of section 15AB of the Acts Interpretation Act 1901 (AI Act).
Paragraph 15AB(2)(g) of the AI Act provides for material to be considered in the
interpretation of an Act if the material is declared by the Act to be a relevant
document for the purposes of section 15AB of the AI Act.
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. Subclause 4(2) clarifies that for the purposes of this
Act and the Appropriation Act (No. 2) 2022-2023, the portfolio statements, as
defined in subclause 3(1), are taken to cover both the Bill for this Act and the
Appropriation Bill (No. 1) 2022-2023.
Clause 5--Notional transactions between entities that are part
of the Commonwealth
7 Clause 5 provides that notional transactions between non-corporate entities
are to be treated as if they are real transactions. Notional transactions, therefore,
require the debiting of an appropriation made by the Parliament. The payments of
the amounts in Schedule 2 from one non-corporate entity to another do not
require, in a constitutional sense, an appropriation, because both non-corporate
entities operate within the CRF. 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
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
House of Representatives 5
Notes on clauses
appropriation when such notional payments are made. This is consistent with
section 76 of the PGPA Act.
8 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 the Parliament is extinguished by the
amount of the notional payment, even though no payment is actually made from
the CRF. 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.
Part 2--Appropriation items
Clause 6--Summary of appropriations
9 Clause 6 sets out the total of the appropriations in Schedule 2 to the Bill.
The amounts in Schedule 2 to the Bill may be adjusted 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 Australian Taxation Office for Goods and Services Tax
(GST), in accordance with section 74A of the PGPA Act. The amounts
specified in Schedule 2 exclude recoverable GST. The appropriations shown
represent the net amount that the 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 2. 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.
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
House of Representatives 6
Notes on clauses
10 Additionally, the Finance Minister manages the payment from items in the
Bill to Commonwealth 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.
Clause 7--State, ACT, NT and local government items
11 Clause 7 provides administered appropriations for financial assistance to the
States, ACT, NT and local governments. State, ACT, NT and local government
items are appropriated separately for each outcome, making it clear what the
funding is intended to achieve. The amount specified in Schedule 2 for an
outcome may be applied by a non-corporate entity for the purpose of making
payments to any of the States, ACT, NT or local government authorities for the
purpose of achieving that outcome.
12 Clauses 7 and 13 delegate the Parliament's power under section 96 of the
Constitution to impose terms and conditions on payments of financial assistance
to the States to the responsible Ministers listed in Schedule 1 of the Bill.
Schedule 1 also lists Ministers who may determine the amounts and timing of
those payments. These payments are usually made pursuant to eligibility rules and
conditions established by the Government or Parliament.
13 Additional information on payments to the States, Territories and local
government can be found in the portfolio statements of the relevant entities. These
documents can be found at www.budget.gov.au.
Clause 8--Administered items
14 Subclause 8(1) provides for the appropriation of new administered outcome
amounts to be applied by a non-corporate entity for the purpose of contributing to
the outcome for a non-corporate entity. An "administered item" is defined in
subclause 3(1) to be an amount set out in Schedule 2 opposite an outcome for a
non-corporate entity under the heading "New Administered Outcomes". As with
administered items in the Supply Bill (No. 3) 2022-2023, New Administered
Outcomes are appropriated separately for each outcome, making it clear what the
funding is intended to achieve.
15 The purposes for which each administered item can be spent are further set
out in subclause 8(2). Subclause 8(2) provides that 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.
16 New Administered Outcomes 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).
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
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Notes on clauses
17 New Administered Outcomes are typically proposed when a non-corporate
entity's outcomes are changed to reflect new program objectives, strategies and/or
activities; and/or
• a non-corporate entity seeks administered operating appropriations for the
first time (including existing non-corporate entities that have received
departmental operating appropriations in the past); and/or
• annual administered operating appropriations are proposed for the first time,
for programs previously funded by special appropriations.
Clause 9--Administered assets and liabilities items
18 Clause 9 provides amounts in Schedule 2 to acquire administered assets,
enhance existing administered assets and/or discharge administered liabilities
relating to activities administered by non-corporate entities on behalf of the
Government. Administered assets and liabilities appropriations are provided for
functions managed by a non-corporate entity on behalf of the Government.
Administered assets and liabilities items can be applied for any outcomes of a
non-corporate entity specified in the 2022-23 Appropriation Acts listed in
subclause 9(1).
Clause 10--Other departmental items
19 Clause 10 appropriates departmental non-operating appropriations in the
form of equity injections, over which the non-corporate entity also exercises
control. This clause provides that the amount specified in other departmental
items for a non-corporate entity may be applied for the departmental expenditure
of the entity. For example, "equity injections" can be provided to non-corporate
entities to enable investment in assets to facilitate departmental activities and for
Designated Collecting Institutions to purchase heritage and cultural assets.
20 Other departmental items are not expressed in terms of a particular financial
year. For example, equity injection appropriations provide funding to meet the
cost expected to be incurred in the Budget year to acquire a new asset, however,
for a number of reasons, some part of the appropriation might not be required
until a later financial year. Other departmental items are available until they are
spent, or 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.
Clause 11--Corporate entity items
21 Clause 11 provides for appropriations of money for corporate entities to be
paid from the CRF by the relevant Department. Clause 11 provides that payments
for corporate entities must be used for the purposes of those entities.
22 A "corporate entity" is defined in subclause 3(1) to be a corporate
Commonwealth entity or a Commonwealth company within the meaning of the
PGPA Act. Many corporate entities receive funding from appropriations.
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
House of Representatives 8
Notes on clauses
However, these entities are legally separate from the Commonwealth, and as a
result, do not debit appropriations or make payments from the CRF.
23 Corporate entity payments are initiated by requests to the relevant portfolio
Departments from the corporate entities. Corporate entities hold the amounts paid
to them on their own account.
24 Subclause 11(2) provides that if a corporate entity is subject to another Act
that requires amounts appropriated by the 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.
25 The purpose of subclause 11(2) is to clarify that subclause 11(1) 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.
26 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.
Part 3 - Miscellaneous
Clause 12--Crediting amounts to special accounts
27 Clause 12 provides that if the purpose of an item in Schedule 2 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. Special accounts may be established
under the PGPA Act by a determination of the Finance Minister (section 78) that
is disallowable by the 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.
Clause 13--Conditions etc. applying to State, ACT, NT and local
government items
28 Clause 13 deals with the Parliament's power under section 96 of the
Constitution to provide financial assistance to the States. Clause 13 delegates the
power to the responsible Ministers listed in Schedule 1 to the Bill, by providing
the Ministers named in Schedule 1 with the power to determine, in the way
described in subclause 13(3):
• conditions under which payments to the States, ACT, NT and local
government may be made: subclause 13(2)(a); and
• the amounts and timing of those payments: subclause 13(2)(b).
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
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Notes on clauses
29 Subclause 13(4) provides that determinations made under subclause 13(2)
are not legislative instruments, because these determinations are not altering the
appropriations approved by the Parliament. Determinations under subclause 13(2)
are administrative in nature and will simply determine how appropriations for
State, ACT, NT and local government items will be paid.
30 Determinations under clause 13 are rare. Most payments to the States and
Territories are governed by, and appropriated through, the Federal Financial
Relations Act 2009. For the payments to the States, ACT, NT and local
governments in an even-numbered Appropriation Act, generally other legislative
or agreed frameworks determine how the payments are made and when, such as
the Local Government (Financial Assistance) Act 1995 or a National Agreement.
Many of these arrangements can be found on the Federal Financial Relations
website (http://www.federalfinancialrelations.gov.au/).
31 Although financial assistance is provided to the ACT, NT and local
government without reference to section 96 of the Constitution, those payments
are administered in the same way. Therefore, the Ministers identified in
Schedule 1 may set the amounts and timing and impose terms and conditions on
those payments. Subclause 13(5) also notes that clause 13 will not limit the
powers of the Commonwealth under section 96 of the Constitution to provide
financial assistance to a State which is not appropriated by a State, ACT, NT and
local government item.
32 In the Bill, appropriations to the States, ACT, NT and local government are
sought for the Department of Education against Outcome 1, the Department of
Infrastructure, Transport, Regional Development, Communications and the Arts
against Outcomes 1 and 3, and the National Indigenous Australians Agency
against Outcome 1.
33 Further information may also be found in the portfolio statements for the
respective portfolios which are available at www.budget.gov.au.
Clause 14--Appropriation of the Consolidated Revenue Fund
34 Clause 14 provides that the CRF is appropriated as necessary for the
purposes of the Bill. Significantly, this clause 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 clause indicates that the amounts appropriated may be affected by the
PGPA Act, in particular sections 74 to 75 (see clause 6), after the Act commences.
Clause 15--Repeal of this Act
35 Clause 15 provides that the Bill, once enacted, will repeal at the start of
1 July 2025.
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
House of Representatives 10
Notes on clauses
Schedule 1--Payments to or for the States, ACT, NT and
local government
36 In accordance with clause 13, Schedule 1 lists the Ministers responsible for
determinations on payments to or for the States, ACT, NT and local government.
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
House of Representatives 11
Notes on clauses
Schedule 2--Services for which money is appropriated
37 Schedule 2 specifies the appropriations proposed for services that are not the
ordinary annual services of the Government. Schedule 2 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. More details about the appropriations in Schedule 2 are
contained in the portfolio statements and the second reading speech for the Bill.
38 Schedule 2 includes, for information purposes, a figure for the previous
financial year labelled "Actual Available Appropriation (italic figures) -
2021-2022". The Actual Available Appropriation (AAA) is an estimate that does
not affect the amount available at law. That figure provides a comparison with the
proposed appropriations.
39 The AAA is calculated for each item by adding the amounts appropriated in
the previous 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 figure 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 Bill. For these reasons, the Actual Available
Appropriation figures may be different from the sum of amounts provided in
earlier Appropriation Acts.
40 The Bill proposes approximately 7/12ths of the 2022-23 appropriations for
most entities and programs, based on the March 2022 Budget estimates and
adjusted for a small number of programs and entities that received more than
5/12ths of their annual appropriations in the Supply Act (No. 2) 2022-2023. The
details of which entities have received more than 5/12ths of their annual
appropriations are provided in the explanatory memorandum to the Supply Bill
(No. 2) 2022-2023.
41 The Bill reflects the revised allocation of policy matters and legislation
responsibilities between portfolios, in line with the AAO which commenced on
1 July 2022. The AAO created two new portfolios and Departments (Employment
and Workplace Relations and Climate Change, Energy, the Environment and
Water) and required:
(a) renaming existing Departments and portfolios;
(b) establishing outcome statements for new Departments;
(c) amending outcome statements for existing Departments;
(d) transferring appropriations between Departments; and
(e) moving entities between portfolios.
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
House of Representatives 12
Notes on clauses
42 The Bill also reflects the establishment a new non-corporate Commonwealth
entity which commenced on 1 September 2022, the National Emergency
Management Agency, which subsumed the functions of the National Recovery
and Resilience Agency (now abolished) and Emergency Management Australia
(formerly part of the Department of Home Affairs).
Explanatory Memorandum to Supply Bill (No. 4) 2022-2023
House of Representatives 13