EXPLANATORY STATEMENT
Supply Act (No. 1) 2020-2021
AFM Determination (No. 2 of 2020-2021)
Purpose of the Determination
The Advance to the Finance Minister (AFM) is provided under subsection 10(2) of Supply Act (No. 1) 2020-2021 (the Act). Section 10 provides that amounts can be allocated from the AFM, up to a limit of $16,000 million. This AFM provision is reduced by the value of AFMs issued under Appropriation Act (No. 5) 2019-2020. As no allocations were made from Appropriation Act (No. 5) 2019-2020, the balance available is $16,000 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 1 of the Act, for one of the reasons specified in paragraphs 10(1)(a) and (b).
The Finance Minister is satisfied, based on information provided by the Australian Trade and Investment Commission (Austrade) that the additional expenditure was unforeseen until after the last day on which it was practicable to provide for it in Supply Bill (No. 1) 2020‑2021 (the Bill), before it was introduced into the House of Representatives. The Bill was introduced into the House of Representatives on Monday 23 March 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 provide funding to extend the International Freight Assistance Mechanism (IFAM) to 31 December 2020. Consistent with paragraph 10(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 1 of Supply Act (No. 1) 2020‑2021 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 10(2) of Supply Act (No. 1) 2020‑2021 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
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, Austrade was consulted in the preparation of this Determination.
The instrument determines that, in the Supply Act (No. 1) 2020‑2021, the administered item for Outcome 1 for Austrade is increased by $230,080,000.
This Advance is provided to Austrade to extend the International Freight Assistance Mechanism (IFAM) to 31 December 2020. The IFAM supports exporters of premium and perishable agricultural produce by underwriting domestic and international airfreight connectivity.
Overview
The Supply Act (No. 1) 2020-2021, enacted to address urgent and unforeseen expenditure requirements not provided for in the annual appropriation legislation, includes provisions for an Advance to the Finance Minister (AFM). This Act allows for up to $16 billion to be allocated to meet immediate needs, subject to certain conditions outlined in the legislation. The AFM provision is adjusted based on any prior allocations under the Appropriation Act (No. 5) 2019-2020, and in this instance, no allocations were made, leaving the full $16 billion available. The Finance Minister must be satisfied that there is an urgent need for additional expenditure, and this must be due to reasons specified under the Act. This mechanism was introduced to ensure that the government can respond to unforeseen circumstances swiftly, thereby maintaining financial flexibility and responsiveness in governance.
The policy objective behind the AFM provision is to enable the government to address urgent and unforeseen expenditure needs that were not considered when the appropriation legislation was drafted. In this specific instance, the additional funding was deemed necessary to extend the International Freight Assistance Mechanism (IFAM) to support Australian exporters of premium and perishable agricultural products. This extension was identified as crucial after the introduction of the Supply Bill (No. 1) 2020-2021, underscoring the necessity for rapid financial adjustments in response to emerging needs. The decision to allocate these funds was made in consultation with Austrade, ensuring that the additional expenditure aligns with broader economic and trade objectives.
Scope and Application
The Supply Act (No. 1) 2020-2021, along with the accompanying AFM Determination (No. 2 of 2020-2021), pertains specifically to the allocation of funds through an Advance to the Finance Minister (AFM) for urgent and unforeseen expenditures. The Act applies to the Finance Minister who is authorised to facilitate such expenditures, up to a specified limit of $16,000 million, as long as there is an urgent need for expenditure that was not anticipated or was insufficiently provided for in the initial appropriation schedules. The AFM Determination is instrumental in adjusting the appropriations within the Act to accommodate the unforeseen needs, in this instance, to extend the International Freight Assistance Mechanism (IFAM) to 31 December 2020. The Act operates within the Commonwealth jurisdiction, impacting the budgetary allocations for the Australian Trade and Investment Commission (Austrade) and indirectly affecting the sectors reliant on the IFAM. The legislation does not extend to creating rights or imposing duties beyond the constitutional function of authorising withdrawals from the Consolidated Revenue Fund, thereby aligning with human rights considerations as stipulated by the Human Rights (Parliamentary Scrutiny) Act 2011.
Key Provisions
The key provisions of the Supply Act (No. 1) 2020-2021, as supplemented by the AFM Determination (No. 2 of 2020-2021), enable the Finance Minister to allocate funds from the Advance to the Finance Minister (AFM) for urgent and unforeseen expenditure not provided for in the original appropriation legislation. This authority is subject to the conditions outlined in section 10 of the Act, which limits the total AFM to $16 billion and requires that the expenditure be urgent and unforeseen, as per sections 10(1)(a) and (b). The determination adjusts Schedule 1 of the Act to reflect this additional funding for Austrade, specifically for extending the International Freight Assistance Mechanism (IFAM) until 31 December 2020.
The Act imposes specific obligations on the Finance Minister, requiring a determination that there is an urgent need for additional expenditure, which is not covered or insufficiently covered in Schedule 1 of the Act. The determination must be based on information from Austrade and must specify the reason for the urgency and the additional expenditure. The Finance Minister must also ensure that the expenditure aligns with the statutory requirements and does not exceed the prescribed AFM limit. Furthermore, the Act mandates consultation with Austrade during the preparation of the determination, as required under Part 1 of the Legislation Act 2003.
The AFM Determination (No. 2 of 2020-2021) specifies that Schedule 1 of the Supply Act (No. 1) 2020-2021 will be amended to reflect an additional allocation of $230,080,000 to Austrade. This allocation is intended to extend the IFAM, which supports Australian exporters of premium and perishable agricultural produce by underwriting airfreight connectivity. Any failure to comply with the provisions of the Act or the determination could lead to legal consequences, although specific penalties are not detailed in the explanatory statement. However, the legislative instrument is exempt from the disallowance and sunsetting provisions outlined in the Legislation Act 2003, thereby reducing the potential for legislative challenges to the determination.