EXPLANATORY STATEMENT
Appropriation Act (No. 2) 2018-2019
AFM Determination (No. 1 of 2018-2019)
Purpose of the Determination
The Advance to the Finance Minister (AFM) is provided under subsection 12(2) of Appropriation Act (No. 2) 2018-2019 (the Act). Section 12 provides that amounts can be allocated from the AFM, up to a limit of $380 million. The Finance Minister must, however, be satisfied there is an urgent need for expenditure, in the current year, that is not provided for, or is insufficiently provided for, in Schedule 2 of the Act, for one of the reasons specified in paragraphs 12(1)(a) and (b).
The Finance Minister is satisfied, based on information provided by the Department of Infrastructure, Regional Development and Cities (DIRDC) that the additional expenditure was unforeseen until after the last day on which it was practicable to provide for it in the latest appropriation Bill relevant, the Appropriation Bill (No. 2) 2018-2019 (the Bill), before it was introduced into Parliament: paragraph 12(1)(b) of the Act. The Bill was introduced into the House of Representatives on Tuesday, 8 May 2018. An explanation of the additional expenditure provided in this determination under the heading ‘Consultation and Impact’ below.
The effect of the determination is that Schedule 2 of Appropriation Act (No. 2) 2018-2019 will have effect as if it were amended as specified in the determination.
Advances to the Finance Minister generally
The section providing for the AFM is contained in the annual Appropriation Acts. It enables the Finance Minister to facilitate urgent and unforeseen expenditure that was not within the contemplation of Parliament when the Appropriation Act was passed, and was therefore not provided for in Schedule 2 of the Appropriation Act.
A determination made under subsection 12(2) of Appropriation Act (No. 2) 2018-2019 is a legislative instrument, but neither section 42 (disallowance) nor Part 4 of Chapter 3 (sunsetting) of the Legislation Act 2003 applies to the determination.
Statement of Compatibility with Human Rights
The annual Appropriation Acts perform an important constitutional function, by authorising the withdrawal of money from the Consolidated Revenue Fund for the broad purposes identified in the annual Appropriation Acts.
However, as the High Court has emphasised, beyond this, the annual Appropriation Acts do not create rights and nor do they, importantly, impose any duties.
Given that the legal effect of annual Appropriation Acts is limited in this way, the increase of amounts in the annual Appropriation Acts through an AFM is not seen as engaging, or otherwise affecting, the rights or freedoms relevant to the Human Rights (Parliamentary Scrutiny) Act 2011.
Consultation and Impact
Consistent with Part 1 of the Legislation Act 2003, DIRDC was consulted in the preparation of this Determination.
The instrument determines that, in Appropriation Act (No. 2) 2018-2019, the State, ACT, NT and local government item for DIRDC is increased by $75,379,000.
The additional amount is specifically provided to enable DIRDC to fund an expansion of the Drought Communities Program, announced by the Government on 19 August 2018 and at the National Drought Summit held on 26 October 2018. This additional expenditure was included as a new measure in the 2018‑19 Mid‑Year Economic and Fiscal Outlook (MYEFO).
The program requires the payment of 50 per cent of assistance upon execution of the grant program with each council and upon the meeting of milestones in their use of the grant funding. These amounts will be required prior to the Royal Assent of the 2018-19 Additional Estimates Appropriation Bills.
Overview
The Appropriation Act (No. 2) 2018-2019, enacted to manage and allocate government funds efficiently, includes provisions for advances to the Finance Minister to address urgent and unforeseen expenditures that were not initially contemplated during the appropriation process. This Act was introduced to ensure that the government could respond promptly to emergent needs without the delays inherent in amending appropriation bills. The Australian Parliament enacted this Act to provide a mechanism for the Finance Minister to allocate funds up to a specified limit when an urgent need for expenditure arises, ensuring fiscal flexibility and responsiveness. The policy objective of this Act is to facilitate efficient financial management by allowing the government to cover unforeseen expenses that are critical and time-sensitive, thus maintaining public service continuity and addressing unexpected national priorities effectively.
Scope and Application
The Appropriation Act (No. 2) 2018-2019 and its associated AFM Determination (No. 1 of 2018-2019) provide a framework for the allocation of funds to cover urgent and unforeseen expenditures not originally provided for in the Act's Schedule 2. The Act applies to the Commonwealth of Australia and allows the Finance Minister to allocate funds from the Advance to the Finance Minister (AFM) to address such urgent needs, subject to a limit of $380 million and certain conditions. The AFM is a legislative instrument that enables the Finance Minister to address urgent needs that arise after the appropriation Bill has been introduced into Parliament. The AFM determination specifies an increase of $75,379,000 for the State, ACT, NT, and local government item for the Department of Infrastructure, Regional Development and Cities to fund the expansion of the Drought Communities Program, as announced in August and October 2018. The AFM does not apply to any specific exclusions or exemptions other than the specified conditions within the Act. The Act and the associated AFM determination are subject to the Legislation Act 2003, with the exception of disallowance and sunsetting provisions.
Key Provisions
The Appropriation Act (No. 2) 2018-2019 includes a provision under section 12(2) that allows for an Advance to the Finance Minister (AFM). This section permits an allocation of up to $380 million if the Finance Minister is satisfied that there is an urgent need for expenditure not provided for or insufficiently provided for in Schedule 2 of the Act (section 12). Specifically, the determination at hand increases the allocation for the Department of Infrastructure, Regional Development and Cities (DIRDC) by $75,379,000 to fund an expansion of the Drought Communities Program, which was unforeseen at the time the relevant appropriation bill was introduced into Parliament. This determination is effective as if Schedule 2 of the Act had been amended accordingly.
The obligations imposed by the Act on the relevant parties include the requirement that the Finance Minister must be satisfied of the urgency and unforeseen nature of the expenditure, and that the expenditure falls under one of the specified reasons in section 12(1)(a) or (b). For this particular determination, the Finance Minister was satisfied based on information from DIRDC that the additional expenditure was unforeseen until after the latest practicable date to include it in the Appropriation Bill (No. 2) 2018-2019. The determination also stipulates that the additional funds will be used specifically for the Drought Communities Program, as outlined in the 2018-19 Mid-Year Economic and Fiscal Outlook (MYEFO), with payments contingent upon the execution of the grant program with each council and the achievement of certain milestones.
In terms of consequences for non-compliance or breach, the explanatory statement does not detail specific offences or penalties related to the determination itself. However, the determination is a legislative instrument and as such, breaches of the conditions or misuse of the funds could potentially lead to legal action under the relevant sections of the Legislation Act 2003 or other applicable laws. The maximum penalties for such breaches would depend on the specific nature of the breach and the applicable legislation at the time.
Overall, the Act and the accompanying determination serve to ensure that urgent and unforeseen expenditures can be met without the need for a full parliamentary process, provided the criteria in section 12 are met. The determination clarifies the use of the additional funds for a specific program, ensuring transparency and accountability in the allocation and use of public funds.