Financial Framework (Supplementary Powers) Regulations 1997

Commonwealth agencies and departments. Each item in Schedule 1AA identifies the responsible department. That department is the principal user of the spending authority conferred by the item. The department's officers exercise the contracting and expenditure powers for the relevant programs.

Recipients of Commonwealth spending. States and Territories, companies, research institutions, charities, infrastructure operators, and individuals can all be recipients of spending authorised by specific items. The breadth of programs means that almost any entity that receives Commonwealth funds under a non-specifically-authorised arrangement may be receiving money under the authority of the Regulations.

Courts and tribunals. Courts must assess whether specific Commonwealth expenditure falls within the terms of a particular item when the authority for that expenditure is challenged. As in Azimitabar v Commonwealth [2023] FCA 760, the court may need to construe the objective of an item to determine whether a challenged program of expenditure falls within it.

Finance officials. Commonwealth financial officers and legal advisers responsible for ensuring expenditure is lawfully authorised rely on this instrument to identify the statutory basis for particular spending proposals.

The Regulations impose no direct obligations on the public. They are an enabling instrument: they specify what the Commonwealth is authorised to do. The obligations they create are:

• The Commonwealth must ensure that any expenditure relying on s 32B authority falls within a program specified in these Regulations;
• A departmental name change or responsibility transfer does not require amendment of the item to maintain the authority (reg 16(2)); and
• The person to whom the Pulp Mill Permit is transferred must notify the Minister - this obligation is from a different Act and is not in these Regulations.

Commonwealth spending power (s 32B FFSP Act, reg 16). The Regulations specify the programs within which the Commonwealth has statutory spending power supplementary to its executive power. Within a specified program, the Commonwealth may make, vary, or administer arrangements.

Company involvement power (s 39B FFSP Act, reg 22AB). Schedule 1B specifies companies in which the Commonwealth may form, participate in, or acquire interests. The company-involvement power requires the same kind of specification as the spending power.

Transitional application provisions (Part 3). The Regulations contain transitional provisions for various amendments made to the FFSP Act and these Regulations over time, covering how earlier programs continue under the current framework.

The Regulations impose no penalties. They are an enabling and descriptive instrument. Misuse of Commonwealth funds is addressed by the Public Governance, Performance and Accountability Act 2013 (Cth) and related legislation, not by these Regulations.

Constitutional invalidity of expenditure outside the specified items does not attract a penalty as such, but renders the expenditure unlawful and potentially the basis for judicial review or damages in administrative law proceedings, as illustrated by the Azimitabar litigation.

The Regulations are updated by amending legislative instruments made by the Minister responsible for finance. There is no prescribed periodicity for reviews. Historically, the instrument is amended whenever a new program is established by Cabinet or when existing programs are varied or concluded.

The transitional provisions in Part 3 address:

• Division 1: Amendments by the Financial Management and Accountability Amendment (Public Governance, Performance and Accountability) Regulation 2014, dealing with procurement guidelines, disposal of property, and leave entitlements.
• Division 2: Amendments by the 2018 Measures Amendment, dealing with the power to vary or administer grants or arrangements.
• Division 3: Amendments by the Veterans' Affairs Amendments, dealing with veterans' grants and arrangements.
• Division 4: Amendments by the Prime Minister and Cabinet Amendments.

Financial Framework (Supplementary Powers) Act 1997 (Cth). The parent Act. The Regulations are made under and derive their entire authority from this Act. Section 32B(2) of the Act confers spending power only for programs specified in these Regulations. Section 41 preserves the constitutional executive power independently of this statutory scheme.

Australian Constitution, s 61 (executive power). The FFSP Act explicitly preserves s 61 executive power (s 41 FFSP Act). The Azimitabar litigation confirmed that s 61 and s 32B/these Regulations are independent, alternative sources of authority for Commonwealth expenditure.

Public Governance, Performance and Accountability Act 2013 (Cth). Transitional provisions in Division 1 of Part 3 address the interaction with this Act's predecessor (the Financial Management and Accountability Act 1997). The current appropriation and accountability framework is the PGPA Act.

Appropriation Acts. The Regulations specify what programs may be the purpose of expenditure; the Appropriation Acts separately appropriate the money. A program listed in these Regulations still requires an appropriation to fund it.

Migration Act 1958 (Cth). The Azimitabar litigation (2023 FCA 760; 2024 FCAFC 52) arose because the Commonwealth sought to rely on Schedule 1AA items 417.017 and 417.018 as authority for hotel immigration detention expenditure. The court's construction of those items required careful attention to the Migration Act's definitions of "offshore entry person", "transitory person", and "unauthorised maritime arrival".

The Regulations do not appropriate money; they only authorise the spending purpose. This is a common source of confusion. A program listed in Schedule 1AA confirms the legal basis for entering the arrangement or spending, but the actual money must be appropriated under the annual Appropriation Acts. Both are necessary.

Item scope is narrow and literal. As the Azimitabar case (2023 FCA 760) demonstrates, courts construe program item descriptions strictly and in light of the Migration Act's definitions at the relevant time. An item that covers "Offshore Asylum Seeker Management" does not automatically cover all expenditure related to all persons in any form of immigration detention. If the expenditure does not fit the objective of the relevant item, it is not authorised by that item.

Departmental name changes do not invalidate items, but can cause confusion. Reg 16(2) confirms that a change in the name of an administering department does not affect an item's validity. However, tracing the current responsible agency for an older item requires knowledge of machinery of government changes since the item was created.

Historical items remain in the schedule. Concluded programs may remain listed in Schedule 1AA after they have ended. This can create confusion about whether an item is currently operative. Users should check whether the underlying program is still active and whether current appropriations exist for it.

Challenging the constitutional validity of the Regulations is possible but difficult. In Azimitabar, the applicant submitted that s 32B of the FFSP Act was wholly invalid as an impermissible delegation of legislative power. The court found it unnecessary to resolve this (para 36 of the 2023 FCA 760 judgment), but the constitutional challenge was not dismissed as unarguable. The delegation question remains technically open.

Example 1: Authority for a new research grant. The Commonwealth Department of Industry wishes to make a grant to a university for technology research. It identifies an applicable item in Schedule 1AA Part 3 (grants to persons other than States and Territories) with a relevant objective. Under reg 16 and s 32B of the FFSP Act, the department has statutory authority to enter the grant agreement. It still needs an appropriation under the relevant Appropriation Act before it can actually pay the money.

Example 2: Hotel immigration detention (Azimitabar context). The Commonwealth established hotels as places of immigration detention for persons brought to Australia under s 198B of the Migration Act 1958. It relied on items 417.017 and 417.018 in Schedule 1AA Part 4 as its s 32B authority. The Federal Court held (2023 FCA 760 at [288]-[300]) that neither item covered this expenditure: item 417.018 authorised provision of services to people in immigration detention but not the creation of a detention facility; and item 417.017 excluded persons who initially arrived at excised offshore places (which the applicant had). The Commonwealth's expenditure lacked statutory authority under the Regulations.

Example 3: Transfer of administering responsibility. A program originally administered by the Department of Industry is transferred to the Department of Infrastructure following a machinery of government change. Under reg 16(2), the item in Schedule 1AA remains valid notwithstanding the name change. The new administering department inherits the spending authority for the program without any amendment to the Regulations being required.

Example 4: Checking authority before entering a contract. A Commonwealth official in the Department of Health and Aged Care is asked to enter a services contract for a new aged care support program. Before committing the Commonwealth, the official should check whether there is a Schedule 1AA item (or other specific legislative authority) covering the program. If there is no specific enabling Act and no relevant Schedule 1AA item, the expenditure may only be supportable by reference to s 61 of the Constitution, the scope of which is contested in the context of domestic spending programs.