Advance to the Finance Minister Determination (No. 6 of 2020-2021)

Administered by Department of Finance

Legislation au F2020L01493 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

Supply Act (No. 1) 2020‑2021

AFM Determination (No. 6 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. Three allocations have been made from the Act totalling $1,110.568 million. The amount available for allocation from the Act is $14,889.432 million prior to making this determination. 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 Social Services (Social Services) that the expenditure was insufficiently provided for in the Act because of erroneous omission or understatement (paragraph 10(1)(a)).

The Act provided appropriations for an amount broadly equivalent to seven twelfths of the estimated 2020‑21 annual appropriations, including Social Services’ administered item for Outcome 2 (‘Contribute to stronger and more resilient individuals, families and communities by providing targeted services and initiatives’).

However, the Act also provided greater appropriations for certain entities which were expected to have disproportionately high expenditure early in the financial year including to support the COVID‑19 response. Due to the urgency with which the Supply Bill (No. 1) 2020‑2021 was prepared, it was not initially identified that programs funded by Social Services under Outcome 2 would require a higher appropriation for the first half of the financial year. In part, this need arose due to the timing of grant payments to be made under programs falling within that Outcome, which must be paid in early December 2020 (the majority by 1 December 2020). It has since been identified that the seven twelfths appropriation will not be sufficient for Social Services to administer the programs for the relevant period.

Consistent with subsection 10(1) of the Act, the need for expenditure is urgent as payments will need to be made under Outcome 2 grant programs by 1 December 2020.

Further explanation of the additional expenditure is provided in this determination under the heading ‘Consultation and Impact’ below.

The result 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 each annual Appropriation Act and any Supply Act. It enables the Finance Minister to facilitate urgent and unforeseen expenditure that was not within the contemplation of Parliament when the relevant Act was passed, and was therefore not provided for in Schedule 1 of the relevant 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, Social Services was consulted in the preparation of this determination.

The instrument determines that, in Supply Act (No. 1) 2020‑2021, the administered item for Outcome 2 for Social Services is increased by $159,713,242.

This Advance is provided to enable Social Services to fund payments to not-for-profit organisations in early December 2020 in accordance with grant agreements.

Overview

The Supply Act (No. 1) 2020-2021 was enacted to address urgent and unforeseen expenditure requirements not initially contemplated by Parliament, particularly in response to the COVID-19 pandemic. This Act allows for the allocation of funds through an Advance to the Finance Minister (AFM), up to a limit of $16,000 million, to meet immediate needs not adequately provided for in the original appropriations. The policy objective of this Act is to enable the government to address critical and unanticipated financial requirements in a timely manner, ensuring that essential services can continue without interruption. This legislative instrument was prepared in consultation with relevant departments, specifically the Department of Social Services, which identified a shortfall in funding for certain grant programs under Outcome 2, necessitating an urgent allocation of additional funds to meet payment obligations by early December 2020.

Scope and Application

The Supply Act (No. 1) 2020-2021 and its accompanying AFM Determination (No. 6 of 2020-2021) primarily apply to the Australian Government, specifically the Finance Minister, and the Department of Social Services. The Act allows for the allocation of funds from the Advance to the Finance Minister (AFM), up to a specified limit, to address urgent and unforeseen expenditures not initially provided for in the Act due to erroneous omissions or understatements. This AFM mechanism is designed to facilitate financial flexibility in response to immediate needs, such as those arising from the COVID-19 pandemic. The Act's jurisdictional reach is national, as it operates within the Commonwealth framework. There are no exclusions or exemptions specified within the Act; however, any allocations from the AFM are subject to the satisfaction of the Finance Minister regarding the urgency and necessity of the expenditure. The AFM provision can be extended or restricted through subordinate instruments, although this particular determination focuses on increasing the appropriation for the Department of Social Services to meet specific grant payment obligations in early December 2020.

Key Provisions

The Supply Act (No. 1) 2020-2021 provides for the allocation of funds from the Advance to the Finance Minister (AFM) to cover urgent and unforeseen expenditure not initially provided for in the Act, as stipulated in section 10(2). This AFM can be allocated up to a limit of $16,000 million, adjusted by any prior allocations from the Appropriation Act (No. 5) 2019-2020. Currently, three allocations have been made from the Supply Act, totalling $1,110.568 million, leaving $14,889.432 million available. The Finance Minister has determined an additional allocation of $159,713,242 for the Department of Social Services (Social Services) to address an urgent need for increased funding under Outcome 2, which supports targeted services and initiatives for individuals, families, and communities. The urgent need for this additional funding arises due to the erroneous omission or understatement of required appropriations in the Act, as outlined in section 10(1)(a) of the Act. The obligations imposed by the Supply Act on the Finance Minister and Social Services include ensuring that any allocation from the AFM is based on an urgent need for expenditure that was not anticipated at the time of the Act's passage. Specifically, the Finance Minister must be satisfied that there is a pressing requirement for additional funds, which is documented in the determination. Social Services must provide evidence to support this need, demonstrating that the original appropriations were insufficient due to an error in estimation. This process involves consultation and coordination between the Finance Minister and relevant departments to identify and validate the necessity for additional funding. The Act does not explicitly outline specific offences, penalties, or civil and criminal consequences for breaches of its provisions. However, the allocation of funds through the AFM is a legislative process that must adhere to the requirements set out in the Act and any related legislation. Failure to comply with these requirements could potentially lead to legal challenges or administrative actions. For instance, if the allocation process is deemed to have been conducted improperly or without proper justification, it might result in scrutiny from parliamentary committees or legal review, which could affect future allocations and the credibility of the legislative process. The primary consequence of non-compliance would likely be the inability to meet the urgent financial needs identified, thereby impacting the delivery of services and initiatives outlined in the Act.

Area of Law: Finance & Banking Law
Instrument: Statutory Instrument
Concepts: Definitions & Interpretation; Commencement Provisions; Repeal & Amendment

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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