EXPLANATORY STATEMENT
Appropriation Act (No. 2) 2019‑2020
AFM Determination (No. 1 of 2019‑2020)
Purpose of the Determination
The Advance to the Finance Minister (AFM) is provided under subsection 12(2) of Appropriation Act (No. 2) 2019‑2020 (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 Health (Health) that the additional expenditure was unforeseen until after the last day on which it was practicable to provide for it in Appropriation Bill (No. 4) 2019‑2020 (the Bill), before it was introduced into the House of Representatives. The Bill was introduced into the House of Representatives on Thursday, 13 February 2020. An explanation of the additional expenditure is provided in this determination under the heading ‘Consultation and Impact’ below.
The Commonwealth Government agreed that this appropriation is essential to the Australian Health Sector Emergency Response Plan for Novel Coronavirus. Consistent with paragraph 12(1)(b) of the Act funding is urgent because the timing for the expenditure was unforeseen when it was last possible to include funding in appropriation legislation before the end of the financial year.
The effect of the determination is that Schedule 2 of Appropriation Act (No. 2) 2019‑2020 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 relevant 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) 2019-2020 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, Health was consulted in the preparation of this Determination.
The instrument determines that, in Appropriation Act (No. 2) 2019‑2020, the Administered Assets and Liabilities for Health is increased by $100,000,000.
The additional amount is specifically provided to enable Health to fund the procurement of masks and other emergency medical or emergency health equipment for the National Medical Stockpile as part of the Australian Health Sector Emergency Response Plan for Novel Coronavirus.
Overview
The Appropriation Act (No. 2) 2019-2020 was enacted to provide for the appropriation of revenue and the raising of loans for the service of the financial year ending 30 June 2020 and for related purposes. The Act was introduced to address the need for urgent and unforeseen expenditure that could not be included in the original appropriation bills due to their unforeseen nature. The Advance to the Finance Minister (AFM) provision within the Act allows for the allocation of up to $380 million to meet such urgent needs, subject to the Finance Minister being satisfied that there is an urgent requirement for the expenditure. The Parliament of Australia enacted this Act to ensure that the government could respond swiftly to unexpected financial requirements, thereby maintaining fiscal flexibility and enabling effective governance. The policy objective is to ensure that essential services and responses, such as the procurement of medical supplies for the Australian Health Sector Emergency Response Plan for Novel Coronavirus, are adequately funded even when they arise outside the normal legislative appropriation cycle.
Scope and Application
The Appropriation Act (No. 2) 2019-2020, and specifically the Advance to the Finance Minister (AFM) Determination (No. 1 of 2019-2020), applies to the Commonwealth Government, particularly the Department of Health, which is tasked with the urgent and unforeseen expenditure for the Australian Health Sector Emergency Response Plan for Novel Coronavirus. This determination enables the allocation of up to $380 million from the AFM to meet the urgent needs that were not provided for in Schedule 2 of the Act. The Act applies to the Commonwealth of Australia, with the expenditure being authorised under the authority of the Finance Minister, who must be satisfied of the urgent need for the additional funds based on unforeseen circumstances that arose after the last practicable opportunity to include the funding in the appropriation legislation. The AFM mechanism is designed to address expenditures that were not within the contemplation of Parliament when the relevant Appropriation Act was passed. The determination itself is a legislative instrument and is exempt from certain legislative scrutiny processes, such as disallowance and sunsetting provisions. This determination neither creates nor imposes any new rights or duties but serves to facilitate the necessary funding for emergency health responses.
Key Provisions
The main operative sections of the Appropriation Act (No. 2) 2019-2020, as amended by the AFM Determination (No. 1 of 2019-2020), are sections 12(1) and 12(2). Section 12(1) outlines the conditions under which the Finance Minister can authorise an advance to himself or herself, including urgent needs for unforeseen expenditure that were not provided for in the Appropriation Bill. Section 12(2) permits the Finance Minister to make a determination to increase the appropriation by up to $380 million if certain criteria are met. This determination increases the Administered Assets and Liabilities for Health by $100 million to fund the procurement of emergency medical equipment, specifically masks, as part of the Australian Health Sector Emergency Response Plan for Novel Coronavirus.
The Act imposes certain obligations and requirements on the parties it governs. The Finance Minister, in making the AFM determination, must be satisfied that there is an urgent need for the expenditure that was not provided for in the Appropriation Bill due to unforeseen circumstances, as specified under section 12(1)(a) and (b). Additionally, the determination must be consistent with the legislative process outlined in the Legislation Act 2003, and it must be prepared with consultation from the Department of Health, as mandated by Part 1 of the Legislation Act 2003. The determination also ensures that the additional funds will be used strictly for the intended purpose of procuring emergency medical equipment as part of the emergency response plan.
The legislation does not explicitly outline specific offences, penalties, or civil/criminal consequences for breaches of its provisions. However, it is important to note that any misuse of the allocated funds or failure to comply with the intended purpose of the appropriation could potentially lead to financial mismanagement or other administrative consequences under broader public financial management laws. The determination ensures that the funds will be used for the specified emergency procurement, and any deviation from this purpose could result in scrutiny and accountability measures under relevant public sector regulations.