Financial procedure in the Australian parliament

Part of a series of posts on financial procedure:
British Parliament
Federal Canadian Parliament
Australian Commonwealth Parliament
New Zealand Parliament

The commonwealth parliament of Australia is different to the other two countries we have looked at so far because it decides what it’s going to spend and how it’s going to raise it before they start spending/raising it! This apparently rare display of preparedness is helped by the financial year starting on the 1st of July in Australia; three months after Canada and the UK.

One day in May, the Treasurer will set out the budgetary policy of the government for the coming financial year. The government has a bonanza of bills which it unleashes upon the House of Representatives on that day. On the question of how much money the government will spend, the Appropriation Bill no 1 sets spending limits for ordinary government expenditure and continuing policies, the Appropriation Bill no 2 sets spending limits for new policies, programs and money paid to the states, and the Appropriation (Parliamentary Departments) Bill sets limits for parliament itself. The budget presentation itself, as it is called, is a speech given by the Treasurer on the second reading of the Appropriation Bill (no 1).

As soon as those bills are published, the eight Senate Legislation Committees begin their examination of the Portfolio Budget Statements of departments and agencies under their purview, documents which in effect are the estimates for every department and agency. These documents vary greatly in quality and detail, but specify the policy outcomes that their funding is meant to achieve, divide spending into ordinary annual services (same as the UK’s departmental expenditure limits) and special appropriations (likewise for annually managed expenditure) as well as delineating which acts of parliament mandate the spending. They even break down spending into specific programs. They hear evidence from officials and ministers for (usually) four days, considering the proposed expenditures and revenues and the performance of policies funded by them. These committees don’t ever agree to these estimates, or even vote on them.

The Appropriation Bill (no 1) continues its second reading over a few days and is usually referred to the Federation Chamber for consideration in detail, although it is possible that the House Standing Committee on Economics might be asked to write an advisory report on the Appropriation Bills. After debating the schedule of the bill (where the detail is explained), the rest of the bill is agreed to without debate and any amendments are voted on when the bill returns to the chamber. This is effectively the same as the votes at the end of British and Canadian estimates/supply days. The bill then goes to third reading and is passed on to the Senate. The other two appropriations bills are also debated, but aren’t usually considered in detail, instead progressing straight to third reading.

In the Senate, these bills (like all bills imposing a tax or appropriating money) are technically debatable on first reading, although this doesn’t tend to happen. They go through second reading as normal and are not usually referred to Committee of the Whole Senate*. They are passed with some debate but there isn’t usually a serious challenge to the bills. Normally the whole passage of the bill takes two months, but the Senate portion only two days.

That’s supplying the government with money done. Then there is the question of where that money comes from. A big difference in financial legislation in Australia and the UK is that all tax rates are set in perpetuity. The UK tends to set key tax rates, like income tax, for individual financial years, extending at most a year ahead. The relative lack of urgency in setting tax rates combined with the fact that omnibus bills of many different provisions are not used in Australia means a wide range of bills are introduced to implement the tax changes announced in the budget throughout the financial year instead of one bill to be rushed through before the year starts. Likewise, bills that order the government to spend money on a permanent basis also can be introduced at any time.

Many of these bills are not controversial and sail through the parliamentary process without being referred for consideration in detail. The Senate can and does attempt to change financial legislation, but officially speaking it can’t. That’s right – the constitution forbids the Senate amending these particular bills. Instead it can refuse, usually at committee of the whole senate, to pass a bill until the House of Representatives amends it. While being technically different to amendments, it ultimately has the same effect. Once the report is accepted by the Senate, the bill is sent to the Commons to be amended and once the Senate is satisfied (or gives in) they send the bill to third reading.

Starting in November, Appropriation Bills nos 3 and 4 and (Parliamentary Departments) no 2 will be introduced and passed in the same way as the no 1 bill, though Senate Estimates hearings will generally take place only for two days. These represent additional estimates.

*In fact, the Senate Estimates hearings were devised in 1970 chiefly to replace committee of the whole on appropriation bills, though it took decades before they stopped using committee of the whole senate.
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