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Last updated: March 2008
Financial management and budget frameworks
Appropriations framework
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For more on the framework, see:
- Finance Circular 2004/16: Appropriation Management: Responsibilities of agencies
- Finance Circular 2004/6: Appropriations and the Consolidated Revenue Fund
- Appropriations bills
- Budget Paper Four 2007-2008 - Introduction
For more information :
Expenditure of public money from the Consolidated Revenue Fund (CRF) must be supported by an appropriation made by law (as required by sections 81 and 83 of the Constitution). This is a mechanism for safeguarding Parliament´s control over both the amount of money to be spent and the purposes on which that money may be spent.
Laws authorising public money to be drawn from the CRF can be classified as either legislation with special appropriations, or are one of the annual appropriation Acts. The annual appropriation Acts are the source of funding for approximately 20 per cent of all Government expenditure and are considered as part of the annual Budget and Additional Estimates processes. Annual appropriation Acts may also be considered at other times during the year. The remaining 80 per cent is funded by special appropriations.
Annual appropriations
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The annual appropriation Acts contain appropriations of specified amounts for particular purposes. The Bills proposing the annual appropriations are key legal documents in the Government´s annual Budget (for information about the annual Budget see: www.budget.gov.au).
Annual appropriations are split into those that provide for the ordinary annual services of the Government and those that do not. Amounts for the ordinary annual services are appropriated according to whether they are departmental or administered. Departmental appropriations are for expenses over which an agency has control, such as salary payments to staff and payments to suppliers. Administered appropriations are for activities administered by the agency on behalf of the government, and are normally governed by eligibility rules and conditions established by the government or the Parliament such as grants, subsidies and benefit payments. Administered expenses are appropriated separately for agency outcomes, specifying precisely how much funding can be expended on each outcome. Outcomes are the results of impacts on the community or the environment that the Government intends to achieve. They are specified by the responsible portfolio Minister with the endorsement of the Minister for Finance and Administration (Finance Minister).
Appropriations that are not for the ordinary annual services of government are appropriated in a separate Act. This Act covers both administered amounts, such as grants to the states and payments to the territories and local governments, and 'non-operating costs' (sometimes called 'capital' costs) which are used to fund activities such as the creation or purchase of new assets.
Special appropriations
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Special appropriations are contained within Acts and provide authority for amounts to be drawn from the CRF for the purposes of the Act, for example, to finance a particular project or a programme such as social security payments. There are a number of different kinds of special appropriations including those which:
- provide appropriation of a fixed amount (e.g. grants to Schools Assistance (Learning Together – Achievement Through Choice and Opportunity) Act 2004
- establish a method for calculating the amount to be spent, often triggered by eligibility criteria (eg. welfare payments under the Social Security Act 1991); and
- provide an automatic appropriation in certain situations (eg. repayments of amounts paid to the Commonwealth, under section 28 of the Financial Management and Accountability Act 1997 (FMA Act).
Special Accounts
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Special accounts are established for specific purposes under sections 20 and 21 of the Financial Management and Accountability Act 1997 (FMA Act). A Special Account may draw and spend funds from the Consolidated Revenue Fund, up to the uncommitted balance recorded in the Special Account.
The amounts recorded as credits in a Special Account can reflect funding from various sources. For example, agency appropriations (annual or special) or external contributions (eg. from other Australian Government agencies, other governments or industry).
