EXPLANATORY STATEMENT
Appropriation Act (No. 2) 2019‑2020
AFM Determination (No. 5 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 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 25 July 2019. 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.
Royal Assent to Appropriation Act (No.4) 2019-2020 on 26 March 2020 had the effect of resetting the AFM available through Appropriation Act (No.2) 2019-2020 to its original balance of $380 million. Accordingly, the Determination reflects the AFM appropriated in Appropriation Act (No.2) 2019-2020.
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
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 $380,000,000.
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 Act (No. 2) 2019-2020 was enacted to facilitate urgent and unforeseen expenditure that was not anticipated when the Act was passed, specifically to address the urgent needs arising from the COVID-19 pandemic. This Act allows for advances to the Finance Minister up to a limit of $380 million, provided there is a demonstrated urgent need for the expenditure that was not initially provided for in the Act. Enacted by the Parliament of Australia, the primary policy objective of this Act is to enable rapid financial response to emergent health crises by allowing the Finance Minister to authorise additional funding when required, thereby supporting the Australian Health Sector Emergency Response Plan for Novel Coronavirus. The Advance to the Finance Minister (AFM) Determination (No. 5 of 2019-2020) specifies that an additional $380 million is allocated to the Department of Health to procure essential medical supplies such as masks and other emergency equipment, responding to the unforeseen global spread of COVID-19 and potential supply shortages.
Scope and Application
The Appropriation Act (No. 2) 2019-2020, as supplemented by AFM Determination (No. 5 of 2019-2020), applies to the Australian government, specifically the Department of Health, and allows for urgent and unforeseen expenditure not accounted for in the original appropriation schedule. This legislation pertains to the appropriation of funds up to a limit of $380 million, provided the Finance Minister is satisfied that there is an urgent need for such expenditure due to unforeseen circumstances, as outlined in section 12 of the Act. The determination enables the appropriation of additional funds to the Department of Health to address unforeseen demands for medical equipment, specifically masks and other emergency health supplies, in response to the global spread of COVID-19. This Act extends to the Commonwealth level and its application is limited to the specific fiscal year mentioned, with the balance of the Advance to the Finance Minister reset upon Royal Assent of subsequent appropriation acts. The Act does not apply to any other departments or entities outside of the specified conditions and amounts.
Key Provisions
The key provisions of the Appropriation Act (No. 2) 2019-2020, as elucidated by the Explanatory Statement, revolve around the allocation of an Advance to the Finance Minister (AFM) of up to $380 million (section 12(2)). This allocation is predicated on the Finance Minister being satisfied that there is an urgent need for expenditure that is not, or is insufficiently, provided for in Schedule 2 of the Act (section 12(1)(a) and (b)). In this instance, the urgent need relates to unforeseen expenditure necessitated by the spread of COVID-19, which was not contemplated when the Act was drafted and introduced into the House of Representatives on 25 July 2019. The Advance allows the Department of Health to procure additional masks and emergency medical or health equipment to mitigate potential shortages due to global demand and domestic manufacturing constraints.
The Act imposes specific obligations on the Finance Minister, who must ensure that the urgent need for the additional expenditure is substantiated by the Department of Health. This involves verifying that the expenditure was unforeseen until after the last practicable day to include it in the Appropriation Act. The Finance Minister must also ensure that the additional funds are allocated within the stipulated limit of $380 million and that the expenditure aligns with the Australian Health Sector Emergency Response Plan for Novel Coronavirus. These obligations are critical to ensuring that the AFM is used appropriately and for its intended purpose.
Breaches of the provisions outlined in the Act could result in various legal consequences. While the Act does not specify explicit offences or penalties for non-compliance, any misuse of the AFM or failure to adhere to the stipulated conditions could be subject to judicial review or other legal remedies. The Act's provisions are designed to ensure that the AFM is used effectively and responsibly to address urgent and unforeseen expenditures, thereby maintaining fiscal discipline and accountability within the government’s financial management framework.