Part 1: Agency Financial Resourcing
An appropriation is a legal entitlement to spend money from the Consolidated Revenue Fund (CRF). Appropriations can be classified as annual appropriations or special appropriations. Annual appropriations are contained in the annual Appropriation Acts. Special appropriations are contained in other Acts.
The CRF is a concept established in section 81 of the Australian Constitution to represent all Commonwealth money. All revenues or moneys raised or received by the Executive Government of the Commonwealth, or any person or organisation acting on behalf of the Commonwealth, automatically form part of the CRF. This includes, for example, taxes, charges, levies, borrowings, loan repayments and moneys held on behalf of or in trust. Money automatically forms part of the CRF upon receipt, regardless of whether the money is deposited in a bank account.
Section 83 of the Constitution provides that no money shall be drawn from the Treasury of the Commonwealth except under an appropriation made by law (the 'Treasury' of the Commonwealth equates to the CRF). Section 81 provides that appropriations from the CRF must be applied for expenditure of the Commonwealth. Together, sections 81 and 83 provide that before money may be spent there must be an appropriation, made by law, for the purposes of the Commonwealth. These requirements for an appropriations framework safeguard the constitutional control by the Parliament over Australian Government spending.
The appropriation and expenditure framework for agencies in all Australian governments is based on the accounting concept of control. Where an agency has substantial control, the related appropriation and expenditure is classified as departmental and where an agency does not have control, expenditure is classified as administered. This classification is unique to government and is not used elsewhere in the Australian economy. It is currently reflected in Australian Accounting Standard AASB 1050. Whether an agency has administered or departmental control over resources is based largely on the level of discretion the agency has in using those resources.
Departmental appropriations are available to meet expenditure over which an agency has substantial control and are typically used for agency operational expenditure, such as for employees and supplier expenses. Administered appropriations are administered by an agency on behalf of government, for the benefit of or payment to parties who are external to the agency and not part of the internal operations of that agency. Administered appropriations are typically used for expenditure such as government grants, subsidies and obligations that arise from legislated eligibility rules and conditions. Further information on the appropriations framework can be found at www.finance.gov.au/resourcemanagement/appropriations/introduction.
Machinery of government changes
The term 'machinery of government changes' (MoG changes) is used to describe a variety of organisational or functional changes affecting the Commonwealth. MoG changes often arise from changes to the Administrative Arrangements Order (AAO) following a Prime Ministerial decision to abolish or create a department or to move functional responsibilities between agencies.
The AAO of 23 December 2014 resulted in renaming of the following two Departments of State:
|Before 23 December 2014||From 23 December 2014|
|Department of Education||Department of Education and Training|
|Department of Industry||Department of Industry and Science|
At the same time, the following transfer of functions occurred:
- The transfer of child care functions from the former Department of Education to the Department of Social Services.
- The transfer of vocational and adult migrant training functions from the former Department of Industry to the Department of Education and Training (bringing all the main training functions into the one portfolio).
- The transfer of small business programme functions from the former Department of Industry to the Department of the Treasury.
The AAO of 23 December 2014 can be found at: www.dpmc.gov.au/parliamentary/index.cfm. For further detail on how the MoG changes impact on portfolios, refer to the relevant 2015‑16 Portfolio Budget Statements.
Agency resourcing table
Overview of the Agency resourcing table
The Agency resourcing table presents a consolidated view of estimated financial resources to be managed in the Budget year by agencies in the GGS. It is organised by portfolio and agency, and by agency Outcome.1 It differentiates the sources of funding, which are annual Appropriation Bills, Receipts, Special Appropriations and Special Accounts. The amounts are classified into departmental and administered resourcing.
Resourcing amounts in the Agency resourcing table can be matched with amounts in the annual Appropriation Bills, Special appropriations table and Special accounts table. Examples are in Figures 1 to 4 of the section entitled Guide to Budget Paper No. 4.
The Agency resourcing table shows that annual appropriations are expected to fund approximately 25 per cent of all GGS expenditure for the Budget year, with special appropriations accounting for the balance.
The column headed Receipts in the Agency resourcing table shows income received from other government agencies, individuals, or non‑government bodies (in the large part such receipts are received for the provision of services).
The column headed Special Accounts in the Agency resourcing table shows estimated amounts to be credited to a special account. This column shows income expected from other government agencies, individuals or non‑government bodies. This column is located between the departmental and administered sides of the Agency resourcing table because depending on the legislated purposes of a special account, the resources may be used for departmental and/or administered expenditure.
The total amounts in the Agency resourcing table cannot be used to calculate consolidated Commonwealth financial resources. This is because the Agency resourcing table covers only agencies in the GGS whereas, the Commonwealth also includes agencies that are public corporations operating in the commercial sphere that are not primarily financed by government. Furthermore, the Agency resourcing table has not been adjusted to eliminate inter‑governmental transactions. Such transactions occur when one agency in the GGS pays another agency in the GGS for services received. To eliminate inter‑governmental transactions would not accurately represent the financial resources managed by a particular agency.
1 The text of the Outcomes applying to each agency is set out at Appendix A Agency outcome statements.