General policy statement

It is a basic constitutional principle that the Government can spend public money and incur expenses and capital expenditure only in accordance with appropriations made by an Act of Parliament and in an otherwise lawful manner.

However, Parliament has, in the Public Finance Act 1989, conferred limited authority on the Governor-General by Order in Council to vary appropriations made by Parliament, and on the Minister of Finance to approve expenditure in excess of an existing appropriation by Parliament.

Section 25 of the Public Finance Act 1989 authorises the Minister of Finance to approve the incurring of expenses or capital expenditure to meet the costs of an emergency or disaster, whether or not there is an appropriation by Parliament available for the purpose, and despite sections 4, 8, and 9 of that Act. Expenses and capital expenditure incurred under the approval must be confirmed in an Appropriation Bill.

Section 4 of the Public Finance Act 1989 prohibits the incurring of expenses or capital expenditure, except as expressly authorised by an appropriation, or other authority, by or under an Act. Sections 8 and 9 of that Act require appropriations to be limited to a specified amount and limited to the scope of the appropriation.

Section 26A of the Public Finance Act 1989 authorises the Governor-General by Order in Council to direct that an amount appropriated in a Vote for an output expense be transferred to another output expense appropriation in that Vote. There are 3 restrictions. First, the transfer must not increase that appropriation for the financial year by more than 5%. Secondly, there must have been no other transfer under section 26A of the Public Finance Act 1989 to that appropriation during the financial year. Thirdly, the total amount appropriated for all output expense appropriations for that Vote for the financial year must remain unaltered. A clause that confirms these Orders in Council must be included in an Appropriation Bill that applies to that financial year.

Section 26B of the Public Finance Act 1989 authorises the Minister of Finance to approve the incurring of expenses or capital expenditure in the last 3 months of a financial year in excess, but within the scope, of an existing appropriation by Parliament. This is subject to a limit that is the greater of $10,000 or 2% of the total amount appropriated for that appropriation by all Appropriation Acts for that financial year. The approval must be given not later than 3 months after the end of the financial year concerned. Expenses and capital expenditure incurred under the approval must be confirmed in an Appropriation Bill that applies to that financial year.

Section 26C of the Public Finance Act 1989 requires the incurring of expenses or capital expenditure without appropriation, or other authority, by or under an Act to be validated by an Act of Parliament.

During the financial year ended 30 June 2011, some expenses and capital expenditure were incurred that were in excess, or outside the scope, of the relevant appropriation or were incurred without appropriation, or other authority, by or under an Act of Parliament. These expenses and capital expenditure fall into 2 categories: those that were incurred under the authority of an Imprest Supply Act and those that were incurred without any such authority.

During or at the end of the financial year ended 30 June 2011, the net asset holdings in some departments exceeded the most recent projected balance of net assets for those departments, either as set out in an Appropriation Act or approved under an Imprest Supply Act. Those net asset holdings require validation.

This Appropriation Bill—

• confirms emergency expenses incurred for the financial year ended 30 June 2011 with the approval of the Minister of Finance under section 25 of the Public Finance Act 1989 (clause 5). Details of this confirmation are set out in Schedule 1:

• confirms the Public Finance (Transfers Between Outputs) Order 2011, which was made under section 26A of the Public Finance Act 1989 (clause 6):

• confirms expenses incurred for the financial year ended 30 June 2011 in excess, but within the scope, of an existing appropriation in accordance with the approval of the Minister of Finance under section 26B of the Public Finance Act 1989 (clause 7). Details of this confirmation are set out in Schedule 2:

• validates unappropriated expenses and capital expenditure incurred for the financial year ended 30 June 2011 that were in excess of an existing appropriation, or without appropriation, or other authority, by or under an Act of Parliament—

  • clause 8 concerns the expenses that were incurred under the authority of an Imprest Supply Act. Details of these validations are set out in Schedules 3 and 4:

  • clause 9 concerns the expenses and capital expenditure that were incurred without the authority of an Imprest Supply Act. Details of these validations are set out in Schedules 5 and 6:

• validates excess net asset holdings in 3 departments during or at the end of the financial year ended 30 June 2011 (clause 10). Details of these validations are set out in Schedule 7.

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 is the commencement clause. The Bill comes into force on the day after the date on which it receives the Royal assent.

Clause 3 states the purposes of the Bill, which are—

• to confirm financial matters relating to the financial year ended 30 June 2011; and

• to validate other financial matters relating to the financial year ended 30 June 2011.

Clause 4 is an interpretation clause.

Clause 5 confirms the incurring of emergency expenses for the financial year ended 30 June 2011 with the approval of the Minister of Finance under section 25 of the Public Finance Act 1989. There are 3 instances in 2 Votes administered by 2 departments of approved emergency expenses. These are set out in Schedule 1.

Clause 6 confirms the Public Finance (Transfers Between Outputs) Order 2011. That order, which came into force on 30 June 2011, directed that fiscally neutral transfers be made decreasing the amounts appropriated for 18 output expense appropriations in 5 Votes and increasing the amounts appropriated for 10 other output expense appropriations in the same 5 Votes.

Clause 7 confirms the incurring of expenses for the financial year ended 30 June 2011 in excess, but within the scope, of an existing appropriation in accordance with the approval of the Minister of Finance under section 26B of the Public Finance Act 1989. There is 1 instance in 1 Vote administered by 1 department of approved unappropriated expenses. This is set out in Schedule 2.

Clause 8 validates expenses that were incurred by departments in the financial year ended 30 June 2011 in excess of existing appropriations. All of these expenses were incurred under the authority of an Imprest Supply Act.

The expenses that were incurred in excess of an existing appropriation are set out in Schedule 3. There are 2 instances in 1 Vote administered by 1 department.

The expenses that were incurred without appropriation, or other authority, by or under an Act are set out in Schedule 4. There is 1 instance in 1 Vote administered by 1 department.

Clause 9 validates expenses and capital expenditure that were incurred by departments in the financial year ended 30 June 2011 in excess of existing appropriations or without appropriation, or other authority, by or under an Act. None of these expenses or capital expenditure were incurred under the authority of an Imprest Supply Act.

The expenses and capital expenditure that were incurred in excess of an existing appropriation are set out in Schedule 5. There are 17 instances in 14 Votes administered by 12 departments.

The expenses and capital expenditure that were incurred without appropriation, or other authority, by or under an Act are set out in Schedule 6. There are 8 instances in 8 Votes administered by 8 departments.

Clause 10 validates the amount of net asset holdings in 3 departments that exceeded a projected balance of net assets at 30 June 2011 for those departments that was set out in either an Appropriation Act or approved under an Imprest Supply Act. Schedule 7 sets out, in respect of each department, the projected balance of net assets that was current at the time that balance was exceeded and the amount of excess net asset holdings to be validated.