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Last updated: 24 December 2009
Payments in special circumstances under section 73 of the Public Service Act 1999
This page provides advice to Australian Public Service (APS) agencies on:
- the provisions of section 73 of the Public Service Act 1999 (PS Act) in relation to the making of special payments; and
- agency reporting requirements relating to section 73 payments.
Scope of section 73 of the PS Act
Section 73 of the PS Act allows the Public Service Minister to authorise the making of payments to a person in special circumstances that relate to, or arise out of:
- the payee’s employment by the Commonwealth; or
- another person’s employment by the Commonwealth.
The power to authorise the making of payments under section 73 of the PS Act has been delegated by the Prime Minister to APS Agency Heads. It is important to note that Agency Heads must exercise this power personally—it is not able to be sub-delegated.
Under the terms of section 73 of the PS Act:
- Payments may be specific amounts or periodical payments and may be authorised even though the payments would not otherwise be authorised by law or required to meet a legal liability.
- An authorisation cannot be made if it would involve, or would be likely to involve, a total amount of more than $100,000.
- Conditions can be attached to any payment that is authorised and if a condition is breached, the payment will be able to be recovered by the Commonwealth in a court of competent jurisdiction.
- It is suggested that legal advice be sought if conditions are to be attached to any such payment.
The provisions set out in section 73 of the PS Act are broadly similar to those contained in section 33 of the Financial Management and Accountability Act 1997 (FMA Act) which makes provision for act of grace payments. Advice on act of grace payments is available on Finance’s website at: http://www.finance.gov.au/publications/finance-circulars/2009/09.html .
- The Finance circular advises that payments in special circumstances relating to Commonwealth employment matters should be made under section 73 of the PS Act, rather than the act of grace provisions of the FMA Act.
It is the Australian Public Service Commission’s view that although section 73 is expressed in broad terms referring to employment in the Commonwealth, section 73 payments should be considered only where the matter concerned has some connection with APS employment. It is implicit in the fact the provision states that ‘payments under this section must be made from money appropriated by the Parliament’ and that ‘[Generally,] a payment can be debited against an agency’s annual appropriation, providing that it relates to some matter that has arisen in the course of its administration’ (see Note at the end of section 73).
Appropriations
Under subsection 73(6) of the PS Act, ‘payments under this section are to be made out of money appropriated by the Parliament for the purposes of this section’.
Since the 1999-2000 financial year, Appropriation Acts have made provision for broad, outcome-based appropriations rather than one-line appropriations. As section 73 payments are made because of some special circumstance relating to a person’s Commonwealth employment, it is considered that they should be made from an agency’s general appropriation covering the purposes of the payment.
Reporting requirements
Agencies should:
- maintain a suitable record of section 73 payments made each year; and
- ensure that payments made under section 73 of the Act during the financial year are reported in the annual financial statements of the agency.
The Financial Management and Accountability Orders require agencies’ financial statements to include a note that shows the number and aggregate amount of any payments made under section 73 of the PS Act during each reporting period. Nil returns must also be reported. For further information see http://www.finance.gov.au/publications/finance-ministers-orders/docs/FMOs-Financial-Reporting.pdf .
Considerations relevant to the exercise of the discretion to make special payments
Section 73 of the PS Act refers to the making of payments because of special circumstances that relate to, or arise out of, the payee’s employment or another person’s employment by the Commonwealth.
The very nature of ‘special circumstances’ requires that the circumstances of each case be taken into consideration in determining whether to authorise payment under section 73, and also indicates that the section would be used only in a limited number of instances. As with the exercise of all powers under the PS Act, an Agency Head will need to have regard to the PS Act framework, in particular the APS Values, in deciding whether to authorise a section 73 payment. Section 44 of the FMA Act, which requires the efficient, effective and ethical use of Commonwealth resources, will also be a relevant consideration for those APS agencies covered by the FMA Act.
Without taking away from the need for decision-makers to consider the circumstances of each case, the following broad guidelines are provided to assist decision-makers’ considerations
- A payment under section 73 might be made where the particular circumstances of a case lead to the publicly defensible conclusion that there is a moral obligation on the Commonwealth to make the payment.
- Payments under section 73 would not generally be appropriate in order to establish a scheme of payments to shore up program or legislative deficiencies. In these circumstances, the expected solution would be to remedy the program or legislative deficiencies.
- Care must be taken by decision-makers to consider the precedent effect of authorising a payment, i.e. whether the payment might be regarded as extending beyond what might reasonably be considered to be ‘special circumstances’.
- If a claim in relation to Commonwealth employment is made on the basis of a legal liability, it would generally be more appropriate for the claim to be considered under the Commonwealth policy on settling claims against the Commonwealth which is set out in Appendix C of the Attorney-General’s Legal Service Directions, Directions on Handling Monetary Claims (issued under the Judiciary Act 1903), which are available on the Attorney-General’s Department’s website at http://www.ag.gov.au/www/agd/agd.nsf/Page/LegalservicestoGovernment_LegalServicesDirections2005 .
- If legal proceedings (including potential legal proceedings) are instituted against an employee for a work-related incident it would normally be appropriate for a request for assistance for legal expenses to be considered under the relevant Commonwealth policy which is set out in Appendix E of the Attorney-General’s Legal Services Directions, Directions on Assistance to Commonwealth Employees for Legal Proceedings, which are available on the Attorney-General’s Department’s website at http://www.ag.gov.au/www/agd/agd.nsf/Page/LegalservicestoGovernment_LegalServicesDirections2005 .
- Similarly, in circumstances where detriment has been caused by the defective administration of a Commonwealth agency (other than cases relating to APS employee entitlements), payments under the scheme for ‘Compensation for detriment caused by defective administration’ may be more appropriate. Advice on this can be obtained from the Department of Finance and Deregulation’s website at http://www.finance.gov.au/publications/finance-circulars/2009/09.html .
- Where there is not a clear case of defective administration or legal liability, and the Agency Head considers that special circumstances exist, it may be appropriate to authorise payment under section 73 of the PS Act.
Section 73 not to be used in redundancy situations
The Australian Government Employment Bargaining Framework requires that workplace arrangements are to include compulsory redeployment, reduction and retrenchment provisions without enhancing existing redundancy arrangements. The use of a section 73 payment to ‘top up’ a redundancy benefit would be inconsistent with the Government’s intentions as set out in the Framework.
Further information
Queries on section 73 payments may be referred to the APS Commission’s Employment Policy Adviceline—by phone on (02) 6202 3859 or email employmentadvice@apsc.gov.au. It would be appropriate for complex queries to be dealt with by email.
