Explanatory Statement
Appropriation Act (No. 1) 2004-05, Section 12 – 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 12 of Appropriation Act (No. 1) 2004-2005”, dated 1 March 2005 and numbered 4 of 2004-2005.
The legislative authority under which the instrument is made
The Advance to the Finance Minister is a central contingency fund to provide urgent appropriation to agencies through the year where existing appropriation proves insufficient or a new appropriation is required. The fund is authorised by the annual Appropriation Acts.
In Appropriation Act (No. 1) 2004-05, the contingency fund is provided for under section 12. 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 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 Appropriation Bill before the 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) 2004-05 were amended to make provision for the additional expenditure specified in the determination.
In an instrument dated 12 February 2003, the Finance Minister has authorised the person holding the position of SES Band 3, Financial Management Group, in the Department of Finance and Administration to exercise the power provided for under section 12 of Appropriation Act (No. 1) 2004-05.
Purpose of the instrument
The instrument determines that the departmental outputs appropriation for the National Water Commission in Appropriation Act (No. 1) 2004-05 be increased by $189,680.
Background
The background to the instrument is provided in the application made by the Commission for funding from the Advance to the Finance Minister. The application is reproduced below.
APPLICATION FOR FUNDS - ADVANCE TO THE FINANCE MINISTER 2004-05
Agency: National Water Commission
Appropriation: Appropriation Act (No. 1) 2004-05
Description: Departmental Outputs – Outcome 1
Outcome Statement: Sustainable management and use of Australia’s water resources
Source of Available Funds | 2002-03 | 2003-04 | 2004-05 |
$’000 | $’000 | $’000 | |
|
|
| |
Appropriation Act No. 1 | - | - | - |
TOTAL FUNDS AVAILABLE | - | - | - |
TOTAL EXPENDITURE | - | - | - |
TOTAL UNSPENT FUNDS | - | - | - |
Funds Required: $189,680
Funds Currently Unspent: $0
Amount required from AFM: $189,680
AFM Category: Appropriation Act (No. 1) 2004-2005 Part 3 Section 12 (1)(b)(ii)
Explanation of requirements from AFM:
The National Water Commission (NWC) is a new agency established by Parliament that commenced on 1 January 2005. The NWC was formally established by the National Water Commission Act 2004 which received Royal Assent on 17 December 2004. The NWC attained prescribed agency status under the Financial Management and Accountability (FMA) Act 1997 on 15 February 2005 following the making of the Financial Management and Accountability Amendment Regulations 2005 (No. 1) at the Executive Council meeting on 10 February 2005 and the Regulations' subsequent registration on the Federal Register of Legislative Instruments on 14 February 2005.
This AFM application is to cover the NWC’s estimated departmental expenditure for the month of March 2005.
As a new agency, the NWC has no existing departmental appropriation to draw on. Furthermore, the functions of the NWC are new ones arising from the June 2004 Coalition of Australian Governments agreement on a National Water Initiative and the Australian Government’s 2004 federal general election policy ‘Securing Australia’s Water Future’ (which included the establishment of an Australian Water Fund). Accordingly, departmental appropriation will not be transferred to the agency from any other agency via section 32 of the Financial Management and Accountability Act 1997.
The NWC’s departmental expenditure for the month of March 2005 has been estimated at $189,680 in total. While the NWC has sought funding of $4,783,000 in the 2004-05 Additional Estimates (AEs) process, this is unlikely to become available until late March or in April 2005. Now that the NWC has attained prescribed agency status under the FMA Act, it is seeking funding for one month from the Advance to enable it to meet its operating expenses.
As the Commission will require funding to meet its departmental costs until such time as AEs funding becomes available, further applications for AFM may be submitted.
Urgent:
The NWC currently has no monies available to it and will not be provided with any appropriation until Appropriation Bill (No. 3) 2004-05 receives Royal Assent, expected in late March or April 2005. The NWC is therefore in urgent need of funds to cover its departmental expenditure until 31 March 2005, pending AEs.
Unforeseen:
The need for departmental appropriation was unforeseen at the time that Appropriation Bill (No. 1) 2004-05 was finalised in May 2004, as the intergovernmental agreement on the National Water Initiative was not signed until June 2004 and the Australian Government decision on the Australian Water Fund was announced on 13 September 2004. The legislation to establish the NWC was introduced to Parliament on 18 November 2004 and subsequently received Royal Assent on 17 December 2004. The estimated expenditure for the NWC was therefore unforeseen at the time that the annual Budget Appropriation bills were prepared.
Notes on the instrument
The instrument provides that the appropriation item listed in column 1 for the National Water Commission be increased by the amount listed in column 3. The instrument specifies that the additional amount is provided for the purpose of providing the Commission, a newly created agency, with sufficient funds to cover its operating expenses for March 2005.