Spending Public Money
How a Government entity spends money depends on what type of entity it is, how it obtains money in the first place and for what purpose, and how much money it will be spending.
The Constitution stipulates the broad principles under which appropriations must operate.
- Section 81 establishes the Consolidated Revenue Fund (CRF), which provides that ‘all revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund …’ The CRF is self-executing in nature, meaning that all revenues or moneys (including taxes, charges, loans and trust moneys) form part of the CRF automatically upon receipt.
- Section 83 provides that no money may be drawn from the Treasury of the Commonwealth without a legal appropriation authority.
The effect of sections 81 and 83 mean that only those entities with the relevant legal authority can spend appropriated money. Agencies subject to the Financial Management and Accountability Act 1997 (FMA Act) are legally part of the Commonwealth and are responsible for the expenditure of these appropriations on behalf of their portfolio minister. Bodies subject to the Commonwealth Authorities and Companies Act 1997 (CAC Act) are legally and financially separate from the Commonwealth.
The Budget process results in Government entities receiving a certain amount of money to carry out their activities, and these amounts are contained in annual Appropriation Acts.
These annual appropriations, while important, represent only about 20 per cent of the Australian Government’s annual expenditure. Special appropriations, which are appropriations created by other Acts of Parliament, represent roughly 80 per cent of the Australian Government’s expenditure.
The Constitution requires an appropriation to withdraw money from the CRF and the FMA Act specifies that this money cannot be withdrawn from the CRF without a drawing right. That is, an official within an FMA agency must have a drawing right to effect the payment of money from the CRF.
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