EXPLANATORY STATEMENT
Appropriation (Coronavirus Economic Response Package) Act (No. 2) 2019‑2020
AFM Determination (No. 3 of 2019‑2020)
Purpose of the Determination
The Advance to the Finance Minister (AFM) is provided under subsection 12(2) of Appropriation (Coronavirus Economic Response Package) Act (No. 2) 2019-2020 (the Act). Section 12 provides that amounts can be allocated from the AFM, up to a limit of $1,200 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 (Coronavirus Economic Response Package) Act (No. 2) 2019-2020 (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 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 (Coronavirus Economic Response Package) 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 (Coronavirus Economic Response Package) 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
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 (Coronavirus Economic Response Package) Act (No. 2) 2019-2020, the Administered Assets and Liabilities for Health is increased by $800,000,000.
This Advance is provided to enable Health to fund the further procurement of masks and other emergency medical or emergency health equipment to address the unforeseen scale of the COVID-19 spread across the globe and possible shortages due to global demand and domestic manufacturing capability.
Overview
The Appropriation (Coronavirus Economic Response Package) Act (No. 2) 2019-2020 was enacted to address urgent and unforeseen expenditure related to the COVID-19 pandemic, which was not contemplated when the Act was passed. This legislation allows for an Advance to the Finance Minister (AFM) to be allocated up to a limit of $1.2 billion to cover such unforeseen expenses. The Act was passed by the Australian Parliament, recognising the need for immediate funding to support the Australian Health Sector Emergency Response Plan for Novel Coronavirus. The policy objective is to ensure that the government can respond effectively and efficiently to the escalating crisis, thereby safeguarding public health and supporting the national economy during this unprecedented time.
The explanatory statement for the AFM Determination (No. 3 of 2019-2020) clarifies that the additional expenditure of $800 million was deemed essential to procure masks and other emergency medical equipment in response to the rapid global spread of COVID-19 and potential shortages due to increased demand and manufacturing constraints. The determination was made under the authority provided by the Appropriation Act and ensures that the Administered Assets and Liabilities for Health are increased accordingly. The determination highlights that the urgent nature of these expenditures was not foreseeable at the time the original appropriation was legislated, underscoring the necessity for a flexible funding mechanism to address the evolving nature of the pandemic.
Scope and Application
The Appropriation (Coronavirus Economic Response Package) Act (No. 2) 2019-2020, and specifically the AFM Determination (No. 3 of 2019-2020) under section 12, provides an appropriation to the Department of Health to address urgent and unforeseen expenditure related to the COVID-19 pandemic. The determination allows for an advance of up to $1.2 billion, subject to the Finance Minister being satisfied of an urgent need for expenditure not accounted for in the Act. In this case, the determination increases the Administered Assets and Liabilities for Health by $800 million to facilitate the procurement of masks and other emergency medical equipment to manage the unprecedented global spread of COVID-19 and mitigate potential shortages. This determination is specific to the Commonwealth and applies to the Department of Health within the Australian Health Sector Emergency Response Plan. The Act does not specify exclusions or exemptions, but it is noted that the determination is a legislative instrument exempt from certain legislative scrutiny provisions under the Legislation Act 2003.
Key Provisions
The main operative sections of the Appropriation (Coronavirus Economic Response Package) Act (No. 2) 2019-2020, specifically referenced in the explanatory statement, allow for an Advance to the Finance Minister (AFM) (sections 12(1) and 12(2)). This provision permits the allocation of up to $1,200 million to meet urgent and unforeseen expenditure not originally included in the Act’s Schedule 2. The explanatory statement clarifies that this Advance is contingent upon the Finance Minister being satisfied that there is an urgent need for the expenditure, which was not anticipated when the Act was prepared. The determination increases the Administered Assets and Liabilities for Health by $800 million to fund the procurement of essential medical equipment, such as masks, in response to the COVID-19 pandemic.
The Act imposes specific obligations on the Finance Minister, who must ensure that any expenditure from the AFM is necessary and unforeseen at the time the original Act was drafted. This includes obtaining information from relevant departments, such as the Department of Health, to substantiate the urgency and necessity of the expenditure. The Finance Minister must also be satisfied that the expenditure aligns with the Australian Health Sector Emergency Response Plan for Novel Coronavirus. Additionally, the Act requires consultation with affected departments before making any determinations, ensuring that all parties are informed and have an opportunity to provide input.
Failure to comply with the provisions of the Act may result in various civil and criminal consequences. While the explanatory statement does not specify particular offences, breaches of appropriation laws can generally lead to legal actions, including fines and other penalties as outlined in the Commonwealth Criminal Code. The maximum penalties for offences related to misapplication of public money can include substantial fines and imprisonment, depending on the severity of the breach. The Act's provisions are designed to ensure that funds are used appropriately and only for the purposes intended by Parliament, with the AFM serving as a mechanism to address urgent needs that arise unexpectedly.