Explanatory Statement
Appropriation Act (No. 1) 2005-06, 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) 2005-2006”, dated 2 November 2005 and numbered 1 of 2005-2006.
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) 2005-06, the Advance to the Finance Minister 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) 2005-06 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 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) 2005-06.
Purpose of the instrument
The instrument determines that the Administered Expenses, Outcome 2 appropriation for the Department of Foreign Affairs and Trade in Appropriation Act (No. 1) 2005-06 be increased by $1,123,008.09.
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 2005-2006
Agency: Department of Foreign Affairs and Trade
Appropriation: Appropriation Act (No.1) 2005-2006
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 | 2003-2004 | 2004-2005 | 2005-2006 |
$ | $ | $ | |
Appropriation Act (No1) Outcome 2 Ex-gratia payments | 0 | 14,569,000 | 0 |
Section 8 Retention. Under the Outcome and Programme Ex gratia | 0 | 0 | 3,378,642.33 |
TOTAL FUNDS AVAILABLE. | 0 | 14,569,000 | 3,378,642.33 |
TOTAL EXPENDITURE. | 0 | 9,778,739.94 | 2,901,219.90 |
TOTAL UNSPENT FUNDS. | 0 | 4,790,260.06 | 477,422.43 |
Funds Required: $1,600,430.52
Funds Currently Unspent: $ 477,422.43
Amount required from AFM: $1,123,008.09
AFM Category: Appropriation Act (No. 1) 2005-2006 Part 3 12 (1) (b) (ii).
Explanation of requirements from AFM:
DFAT was provided $14.569m under the Tsunami Finance Assistance Act 2004-05 as administered appropriation under outcome 2 (ex gratia payments). In 2004-05, DFAT spent $9.779m in costs associated with the Tsunami. The Minister for Finance and Administration has approved the movement of funds of $1.412m to meet the remaining tsunami expenses this financial year. These funds will only become available once the next appropriation bill (PAES 2005-06) receives the Royal assent. The account from Kenyon International Management Services Inc (Kenyons), the contractor that provided victim identification, repatriation of remains and personal effects services to Tsunami victims, is required to be finalised as soon as possible.
Payment to Kenyons is also imperative as potential contributions from other countries affected by the Tsunami are dependant upon presentation of Australian’s statement of total costs. Specifically, Germany’s contribution needs to be made prior to the end of the German financial year, 31 December 2005, as Germany’s contribution will lapse after that date.
Urgent:
The contract between Kenyons and DFAT on behalf of the Australian Government states that invoices must be paid within 30 days. At this stage the department is holding four invoices with a total value of $ USD 1.102 million which are significantly overdue. The Minister for Finance and Administration has approved the movement of $1.412m to meet the remaining tsunami expenses this financial year. However, funds will be available for use only once the next appropriation bill (PAES 2005-06) receives the royal assent. Prompt settlement of Kenyons’ account is critical in order to maintain the credibility of Australia in meeting its payment obligations
The department is currently seeking contributions from other countries whose nationals lost their lives in the tsunami to offset part of the cost of Kenyons’ services. Many countries have given in-principle support to share the cost of Kenyons’sevices, but final commitments are subject to settlement of Australian payments to Kenyons. If the Kenyon payment is not settled urgently there is a risk Australia will lose Germany’s in-principle contribution (2.5 million Euros) as Germany’s financial year officially ends 31 December and Germany’s financial framework does not allow funds to be rolled over.
Unforeseen:
While, the department accrued $3,383,642.00 for outstanding Kenyons invoices prior to the end of the 2004-2005 financial year on the basis of best information available at that time,, precise estimates of services provided were difficult to project given the difficult environment in Thailand.
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 invoices submitted by Kenyon International Management Services Inc in relation to services provided by Disaster Victim Identification Teams following the December 2004 tsunami.