Explainer: Budget Week and the annual appropriation bills

It’s Budget Week! While most people have heard of the Budget, the key pieces of legislation contained within it – the annual appropriation bills – are less often discussed. This explainer looks at what exactly these bills are, their role, and the options available to the Legislative Council during its consideration of these bills. 

What exactly are the annual appropriation bills?

The annual appropriation bills are the bills considered during Budget Week each year. The Appropriation Bill authorises the appropriation of funds from the Consolidated Fund (NSW’s main source of funds). These funds are used in the upcoming financial year for services of the Government and are allocated to departments of the public service and various special offices. Appropriations for capital works – that is, the construction of things – are also included in this bill.

The separate Appropriation (Parliament) Bill appropriates funds specifically for the recurrent services and capital works of NSW Parliament. It’s usually presented as ‘cognate’ with the Appropriation Bill, allowing simultaneous consideration of both, however a member may still request that the bills be voted on separately. From time to time, other cognate (related in subject matter) bills are presented as part of the appropriation ‘package’. For example, last year the Government included a bill amending the Payroll Tax Act 2007 cognate to the other bills.

What can we expect this week?

The appropriation bills will be introduced into the Legislative Assembly – in accordance with section 5 of the Constitution Act 1902 – on Tuesday, along with four Budget papers.

Around the same time as the Assembly is debating the appropriation bills, the Leader of the Government in the Legislative Council (Minister Harwin) will table the Budget papers in our House and move a motion to ‘take note’ of Budget Estimates and Budget papers – allowing the Council to debate the policies on which the Budget is based. This week also presents an opportunity for the House to consider the resolution establishing the 2021-2022 Budget Estimates hearing dates.

Once the appropriation bills have passed through the Assembly, they will be reported in the Council – likely later in the sitting week – where the Council will proceed to debate them. While we don’t know how Council will treat these bills, it’s worth looking at what happened in 2020 for an example of what has happened.

What happened last year?

Historically, the passage of the appropriation bills through the Council has been relatively simple, with members engaging in debate before agreeing to them. This changed last year, when the Council amended the Appropriation (Parliament) Bill 2020 in committee of the whole for the first time (prior to this, the closest it had come was in 1996, when the Council adopted ‘suggested amendments’ to the Appropriation (Parliament) Bill 1996).

In total, the Council agreed to three amendments. The first two, moved by Mr Shoebridge (The Greens) sought to include an additional appropriation of $7.3 million to the Independent Commission Against Corruption (ICAC), separate to funding for ICAC otherwise contained within the Appropriation Bill 2020. The third amendment, moved by Mr Latham and amended by Mr Searle, sought to require the Treasurer to consult with a committee to establish a new funding arrangement for the Legislative Council, with members of the committee to be composed of the Presiding Officers and party leaders (including a representative nominated by the Greens and the Animal Justice Party). The amended Appropriation (Parliament) Bill 2020 was then sent back to the Assembly for concurrence with the amendments, along with the unamended Appropriation Bill 2020 and Payroll Tax Amendment Bill 2020.

When debate on the Council’s amendments commenced in the Assembly, the Treasurer (Minister Perrottet) moved that the Council’s amendments to the Parliament bill be disagreed to, pursuant to 5A of the Constitution Act 1902. Section 5A deals with disagreement between the Houses on appropriation bills “for the ordinary annual services of the government” and permits the Legislative Assembly to send such a bill to the Governor for assent, notwithstanding that the Legislative Council has not consented to the Bill.

In support of his motion, the Treasurer referred to advice of the Solicitor-General, tabled earlier that day, along with advice from a previous Solicitor-General on the same topic from 1992. Both pieces of advice stated that the annual Appropriation (Parliament) Bill was a bill “for the ordinary annual services of the government” and therefore, that it could be sent for assent by the Assembly regardless of amendments agreed to by the Council.

On 27 November 2020, the Assembly sent a message to the Council asserting that it disagreed with the amendments and would send the three bills to the Governor in the form originally agreed to by the Assembly, without the amendments to the Appropriation (Parliament) Bill 2020 being included. The Governor subsequently assented to the bill.

On 17 February 2021, the Council sent a message back to the Assembly, rejecting its assertion that the Appropriation (Parliament) Bill 2020 had been transmitted the Governor pursuant to section 5A of the Constitution Act 1902. The message also stated that the Council did not consider the annual Appropriation (Parliament) Bill to be a bill “appropriating revenue or moneys for the ordinary annual services of the Government” within the meaning of section 5A, nor did it believe that the Legislature was an instrument of the Government. Rather, the message referred to amendments made to the Constitution Act 1902 in 1993 as a clear indication that Parliament does not see parliamentary appropriations as falling within the ambit of appropriations “for the ordinary annual services of the Government”. Reference to a number of independent oversight agencies was also included, with the message noting that the House would pursue a funding model for the Parliament and these agencies  that recognised their independence from the Executive Government.

If you’re interested to learn more about the Council’s view on its powers concerning money bills, you can read in the latest edition of New South Wales Legislative Council Practice here. In the meantime, you can watch the process live on Tuesday on the Parliament’s website and follow the commentary on Twitter, at @nsw_upperhouse.