EXPLANATORY STATEMENT
Supply Act (No. 1) 2020‑2021
AFM Determination (No. 3 of 2020‑2021)
Purpose of this 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. No allocations were made from Appropriation Act (No. 5) 2019‑2020. One allocation has been made from Supply Act (No. 1) 2020‑2021 for $230.080 million. The amount available for allocation from Supply Act (No. 1) 2020‑2021 is $15,769.920 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 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 Supply Bill (No. 1) 2020‑2021 (the Bill), before it was introduced into the House of Representatives (paragraph 10(1)(b)). The Bill was introduced into the House of Representatives on Monday, 23 March 2020.
The Australian Government has agreed that this additional expenditure is essential following the entering into of agreements with AstraZeneca, CSL and Seqirus for the supply and production of the University of Oxford and University of Queensland COVID-19 Vaccine candidates and essential in order to participate in the COVAX Facility. The need for additional expenditure is urgent as payments need to be made before appropriations will be available from Appropriation Bill (No. 1) 2020‑2021 once enacted.
Further explanation of the additional expenditure is provided in this determination under the heading ‘Consultation and Impact’ below.
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 1 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
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 Supply Act (No. 1) 2020‑2021, the administered item for Outcome 5 for Health is increased by $808,754,000.
This AFM is specifically provided to enable Australians to be able to receive COVID-19 vaccines, once they are available. The Government announced agreements made with AstraZeneca, CSL and Seqirus on 7 September 2020 in the joint media release of the Prime Minister, the Minister for Health and the Minister for Industry Science and Technology, Australia Secures Onshore Manufacturing Agreements for Two COVID-19 Vaccines. The Government also announced its agreement to participate in the COVAX Facility on 23 September 2020 in the media release of the Minister for Health, Australia Now Eligible to Purchase COVID‑19 Vaccine Doses through COVAX.
Overview
The Supply Act (No. 1) 2020-2021 was enacted to address urgent and unforeseen expenditures that were not provided for in the initial Supply Bill introduced into the House of Representatives on 23 March 2020. This Act allows for the allocation of funds through the Advance to the Finance Minister (AFM) mechanism, up to a total limit of $16 billion, as specified in subsection 10(2) of the Act. This AFM provision has been reduced by the value of AFMs issued under the Appropriation Act (No. 5) 2019-2020, with no allocations made from that Act. The objective of this determination is to ensure there is sufficient funding for essential and urgent expenditures, particularly in response to the COVID-19 pandemic, as determined by the Finance Minister based on information from the Department of Health. The AFM provision is essential for enabling Australia to participate in the COVAX Facility and secure agreements for the supply and production of COVID-19 vaccines.
The Advance to the Finance Minister generally 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. This determination, under subsection 10(2) of the Supply Act (No. 1) 2020-2021, is a legislative instrument exempt from the disallowance and sunsetting provisions of the Legislation Act 2003. The Department of Health was consulted in the preparation of this Determination, and the increase in administered items for Health is specifically to support the acquisition of COVID-19 vaccines and participation in the COVAX Facility.
Scope and Application
The Supply Act (No. 1) 2020-2021 and the accompanying AFM Determination (No. 3 of 2020-2021) establish a mechanism through which the Australian Government can allocate funds for urgent and unforeseen expenditures not initially covered in the Supply Bill (No. 1) 2020-2021. This legislation primarily applies to the Finance Minister, who is authorised to make an Advance to the Finance Minister (AFM) under subsection 10(2) of the Act, up to a total limit of $16,000 million. The AFM Determination in question allocates $230.080 million from Supply Act (No. 1) 2020-2021, leaving $15,769.920 million available for future allocations. This provision is restricted by the requirement that the Finance Minister must ascertain there is an urgent need for expenditure due to unforeseen circumstances, as outlined in paragraphs 10(1)(a) and (b) of the Act. The AFM Determination applies to the Commonwealth of Australia and is instrumental in facilitating essential expenditures, such as those related to the procurement and production of COVID-19 vaccines through agreements with pharmaceutical companies and participation in the COVAX Facility.
Key Provisions
The Supply Act (No. 1) 2020-2021, as amended by the AFM Determination (No. 3 of 2020-2021), allows for an advance to the Finance Minister (AFM) to cover urgent and unforeseen expenditures not provided for in the Act's Schedule 1. This determination permits an allocation of up to $16 billion, with an actual allocation of $230.080 million made for this financial year, leaving $15.77 billion available for future allocations (subsections 10(2) and (3)). The Finance Minister has exercised this authority to provide additional funding for the supply and production of COVID-19 vaccines, deemed essential following agreements with AstraZeneca, CSL, and Seqirus (paragraph 10(1)(b)).
The AFM Determination imposes a stringent requirement on the Finance Minister to ensure that any allocation from the AFM is justified by an urgent need for expenditure that was not contemplated when the Act was passed, and that the expenditure is essential and cannot wait until the regular appropriations process is completed (subsections 10(1) and (2)). This necessitates thorough consultation with relevant departments, such as the Department of Health, and a clear demonstration that the expenditure addresses a critical, unforeseen need.
Failure to comply with the conditions stipulated in the AFM Determination could potentially result in legal and financial repercussions, though specific penalties are not detailed in the Act. The overarching requirement is that the Finance Minister must be satisfied that the expenditure is both urgent and essential. Non-compliance or misuse of the AFM could lead to scrutiny under the Legislation Act 2003, particularly if it is found that the AFM was not used for its intended purpose of covering unforeseen urgent needs.
The AFM Determination further stipulates that the additional expenditure is aimed at securing COVID-19 vaccines for Australians, aligning with national health objectives and global commitments such as participation in the COVAX Facility. The urgency stems from the need to secure vaccine supplies before regular appropriations are available, ensuring timely access to vaccines. The legislative framework ensures that such critical health expenditures are met promptly, despite the constraints of the regular budgetary process.