Explanatory Statement
Appropriation Act (No. 1) 2007-2008, Section 11 – Advance to the Finance Minister
The instrument to which this explanatory statement relates
This explanatory statement relates to an instrument (the instrument) entitled “Advance to the Finance Minister – Section 11 of Appropriation Act (No. 1) 2007-2008”, dated 25 February 2008 and numbered 6 of 2007-2008.
The legislative authority under which the instrument is made
The Advance to the Finance Minister is a provision authorised by the annual Appropriation Acts and made available to the Finance Minister as a central contingency fund to provide urgent funding to agencies throughout the financial year.
In Appropriation Act (No. 1) 2007-2008, the Advance to the Finance Minister is provided for under section 11. This section indicates that amounts can be issued from the Advance to the Finance Minister, up to a limit of $175 million, if the Finance Minister is satisfied that:
(a) There is an urgent need for expenditure, in the current year, that is not provided for, or is insufficiently provided for, in Schedule 1 (which sets out the amounts appropriated); and
(b) The additional expenditure is not provided for, or is insufficiently provided for, in Schedule 1:
(i) Because of an erroneous omission or understatement; or
(ii) Because the additional expenditure was unforeseen until after the last day on which it was practicable to provide for it in the Bill for this Act before that Bill was introduced into the House of Representatives.
Exercise of the provision via the issue of a determination, has effect as if Schedule 1 of Appropriation Act (No. 1) 2007-2008 were amended to make provision for the additional expenditure specified in the determination.
Purpose of the instrument
The instrument determines that the Administered expenses – Outcome 3 appropriation for the Department of Foreign Affairs and Trade in Appropriation Act (No. 1) 2007-2008 be increased by $2,998,508. The additional amount is for payments in relation to the delivery of Australia Network television services to the Asia Pacific region and the International Relations Grants Program.
Background
The background to the instrument is provided in the application made by the Department of Foreign Affairs and Trade for funding from the Advance to the Finance Minister. The application is reproduced below.
APPLICATION FOR FUNDS - ADVANCE TO THE FINANCE MINISTER 2007-08
Agency: Department of Foreign Affairs and Trade (DFAT)
Appropriation: Appropriation Act (No. 1) 2007-2008
Description: Administered Expenses – Outcome 3
Description of Outcome: Public understanding in Australia and overseas of Australia’s foreign and trade policy and a positive image of Australia internationally.
Source of Available Funds | 2005-2006 | 2006-2007 | 2007-2008 |
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Appropriation Act (No. 1) | 28,846,000 | 4,241,000 | 24,778,000 |
Appropriation Act (No. 3) | 9,956,000 | 18,479,000 | - |
Section 8 Retention | 519,829 | 35 | 4,848 |
Section 31 Receipts | 1,017,078 | - | - |
TOTAL FUNDS AVAILABLE | 40,338,907 | 22,720,035 | 24,782,848 |
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TOTAL EXPENDITURE | 39,761,663 | 22,009,525 | 18,269,181 |
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TOTAL UNSPENT FUNDS | 577,244 | 710,510 | 6,513,667 |
Funds Required: $ 9,512,175
Funds currently unspent: $ 6,513,667
Amount required for AFM: $ 2,998,508
AFM Category: Appropriation Act (No. 1) 2007-2008 Part 3 11 (1)(b)(ii)
Explanation of requirements from AFM:
Subsequent to the 2007-08 Budget, the Government approved as part of the 2007-08 MYEFO a $3 million donation to the Hellenic Red Cross for assistance to victims of forest fires in Greece. This payment was made from the Department of Foreign Affairs and Trade’s (the Department) Administered Act 1, Outcome 3 appropriation. Funding of $3 million for payment to the Hellenic Red Cross is included in Appropriation Bill (No. 3) 2007-2008 and is not expected to be available until April 2008, when the Additional Estimates bills are expected to receive royal assent. This additional commitment and payment has led to the shortfall in Administered Act 1 Outcome 3 appropriation.
The Department is required to make the second 2007-08 financial installment on the contract for the delivery of the Australia Network television service to the Asia Pacific region. Payment is required by 27 February 2008. Any payment delay would be contrary to the terms of the contract with possible legal consequences, could imperil the delivery of this program to which the Australian Government has committed and consequently Australia’s image in the Asia Pacific region. Additionally, any delay would compromise the Department’s reputation for being able to meet its financial obligations.
Urgent:
The current available balance under Appropriation Act (No.1) 2007-2008 Outcome 3 is insufficient to cover a number of payments that are due before the Additional Estimates appropriation bills are expected to receive royal assent in April 2008.
The Department is required to make a payment of $9,368,449 by the end of February 2008 in relation to the second installment of the contract for the delivery of Australia Network television services to the Asia Pacific region. Further, a number of payments under the International Relations Grants Program will also be required.
Unforeseen:
The Department’s administered appropriation does not incorporate any unallocated appropriation to cater for one-off or ad-hoc commitments of administered funds. Decisions of government to donate to foreign relief efforts cannot be foreseen. The expenditure obligation under administered Appropriation Act 1, Outcome 3 in relation to the donation to the Hellenic Red Cross for victims of forest fires in Greece was not known at the time that Appropriation Bill (No.1) 2007-2008 was finalised in May 2007.
Signed By: Chief Finance Officer | |
NAME: | Ann Thorpe |
SIGNATURE: |
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DATE: | 18 February 2008 |