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 8 March 2005 and numbered 5 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 authorised the person holding the position of SES Band 2, Financial Reporting and Cash Management Division, 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 Department of Foreign Affairs and Trade in Appropriation Act (No. 1) 2004-05 be increased by $2,393,848.
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 2004-05
Agency: Department of Foreign Affairs and Trade (DFAT)
Appropriation: Appropriation Act (No.1) 2004-05
Description: Administered Expenses – Outcome 2
Description of Outcome: Australians informed about and provided access to consular and passport services in Australia and overseas
Source of Available Funds | 2002-2003 | 2003-2004 | 2004-2005 |
$ | $ | $ | |
|
|
| |
Appropriation Act (No. 1) | 200,000 | 200,000 | 200,000 |
Section 8 Retention | 6,389 | 405,546 | 6,440 |
Advance to the Finance Minister | - | - | 1,000,000 |
Lapsed Appropriation | (2,207,322) | (791) | - |
Appropriation Act (No. 3) | 3,137,000 | - | - |
TOTAL FUNDS AVAILABLE | 1,136,067 | 604,755 | 1,206,440 |
|
|
|
|
TOTAL EXPENDITURE | 730,521 | 598,315 | 246,345 |
|
|
|
|
TOTAL UNSPENT FUNDS | 405,546 | 6,440 | 960,095* |
Funds Required: 2,399,491
Funds Currently Unspent: 960,095*
Amount required from AFM: 2,393,848
* An amount of $954,452 relates to AFM funding which may only be used in relation to the Travellers’ Emergency Loans programme. The level of assistance provided in this scenario is outside of where a Travellers’ Emergency Loan may be issued and as such, is not eligible to be met from funds appropriated or advanced in this financial year.
AFM Category: Appropriation Act (No. 1) 2004-05 Part 3 12 (1) (b) (ii)
Explanation of requirements from AFM:
With the endorsement of Inter-Departmental Emergency Taskforce (IDETF) established for the Tsunami, DFAT is assisting in the identification, storage and repatriation of Australian fatalities and the return of their personal effects. This included activating its arrangement with Kenyon International Management Services Inc. (Kenyons) to assist international Disaster Victim Identification (DVI) teams. The funding required is to meet the first Kenyons invoice which covers services provided from 26 December 2004 to 14 January 2005.
The repatriation of remains and personal effects is outside of where a Travellers’ Emergency Loan may be issued and as such, cannot be fully met from the balance of DFAT’s administered expenses Outcome 2 appropriation. The vast majority of these moneys ($954,452) were provided via an AFM specifically for the Travellers’ Emergency Loans programme and legally they may only be used for this purpose.
It is anticipated that funding for these expenses will be provided to DFAT through the Tsunami appropriation legislation. However, as such funding is unlikely to become available until late March 2005, AFM is required pending passage of the legislation to ensure timely payment of this invoice.
As work by Kenyons is continuing, DFAT may need to submit further applications for AFM if payment of future invoices is required before funding provided by the Tsunami appropriation legislation becomes available.
Urgent:
The invoice totaling A$2,399,491 (US$1,801,500 - converted at A$1=US$0.7658 + 2% allowance for exchange rate movement) was received by the department on 14 February 2005. The invoice covers the DVI team’s charges, transportation, meals, lodging, supplies and equipment, photographic services, postage and shipping, and equipment rental. The payment terms of this invoice is the standard 30 days, therefore, the payment due date is 14 March 2005. As DFAT currently has insufficient appropriation to cover the Kenyons invoice (an amount of $5,643 only is legally available for this purpose), the department requires AFM funding of $2,393,848 by 8 March 2005 to ensure timely payment by the due date.
Unforeseen:
The South Asian Tsunami, in late December 2004, could not be predicted. Furthermore, the level of service required under these circumstances is outside of where a Travellers’ Emergency Loan may be issued by the Australian Government. Accordingly, the need for expenditure in relation to the identification, storage and repatriation of Australian fatalities and their personal effects was unforeseen at the time that Appropriation Bill (No.1) 2004-05 was finalised in May 2004.
Notes on the instrument
The instrument provides that the appropriation item listed in column 1 for the Department of Foreign Affairs and Trade be increased by the amount listed in column 3. The instrument specifies that the additional amount is provided for the purpose of paying an invoice submitted by Kenyon International Management Services Inc in relation to services provided by Disaster Victim Identification Teams during the period 26 December 2004 to 14 January 2005.