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 5 April 2006 and numbered 11 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 Management Group, 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 5 appropriation for the Department of Families, Community Services and Indigenous Affairs in Appropriation Act (No. 1) 2005-06 be increased by $16,805,593.
Background
The background to the instrument is provided in the application made by the Department of Families, Community Services and Indigenous Affairs 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: Australian Government Department of Families, Community Services and Indigenous Affairs
Appropriation: Appropriation Act (No. 1) 2005-06
Description: Administered expenses – Outcome 5
Description of Outcome: Strong and Resilient Communities
Source of Available Funds | 2003-2004 | 2004-2005 | 2005-2006 |
| $ | $ | $ |
Appropriation Bill No 1 |
|
| 66,973,000 |
Appropriation Bill No 3 |
|
| 1,614,000 |
Application for funds - 28 March 2006 |
|
| 12,201,000 |
TOTAL FUNDS AVAILABLE |
|
| 80,788,000 |
|
|
|
|
TOTAL EXPENDITURE |
|
| 75,393,593 |
|
|
|
|
TOTAL UNSPENT FUNDS |
|
| 5,394,407 |
Funds Required: $22,200,000.00
Funds Currently Unspent: $5,394,407.00
Amount required from AFM: $16,805,593.00
AFM Category: Appropriation Act (No. 1) 2005-2006 Part 3 12 (1)(b)(ii);
Explanation of requirements from AFM:
FaCSIA requires funds urgently to fulfill the Australian Government commitments to victims of Cyclone Larry. FaCSIA is responsible for delivering four of the announced initiatives:
- ex-gratia assistance to people directly affected by Cyclone Larry where their principal place of residence has been destroyed or has been rendered uninhabitable.
- funds for a one-off grant of $100,000 to the Queensland State Government Relief Fund for victims of the cyclone.
- one-off Income Support Programme equivalent to the NewStart Allowance, for six months, to farmers and small business owners whose farms and businesses have been adversely affected by Cyclone Larry.
- ex-gratia assistance toward any excise paid on diesel or petrol used for the generation of electricity for those businesses, farmers and households affected by Cyclone Larry.
Latest available data from Centrelink projects the total cost of payments under initiative 1 processed by 12 April 2006 to be $37 million. Centrelink have advised FaCSIA that they require an additional $11 million on 4 April 2006 to cover claims already paid and those expected by 12 April 2006.
Initiative 2 has been paid and further supplementation is not required through this AFM.
Payments for initiative 3 totaled approximately $500,000 as of close of business 3 April 2006. It is expected that a further $5 million will be paid by 12 April 2006.
Payments for initiative 4 totaled approximately $700,000 as of close of business 3 April 2006. It is expected that a further $4 million will be paid by 12 April 2006.
These payments by FaCSIA will come from Outcome 5. Commitments until 12 April 2006 that are separate to Cyclone Larry related initiatives are approximately $1 million.
Centrelink have requested a payment of $9 million today to cover the shortfall in funding. Over the next 6 working days, they will undoubtedly require funding over and above this amount. It is likely by April 12 2006, that funds in Outcome 5, from which payments to Centrelink for Cyclone Larry related initiatives are made, including this Application for Funds, will be exhausted. It would be highly undesirable for those eligible for the payment to be unable to receive it.
Urgent:
Ex-gratia payments to families, businesses and farms described above to those affected by the cyclone have been paid out since Friday 24 March. It is expected that claims will be made through this week and into next week. Without additional funding, it is likely that funds in Outcome 5 will be exhausted by 12 April 2006.
Erroneous Omission or Unforeseen:
Cyclone Larry was an unexpected natural disaster. The magnitude of this event and the need in the community arising from damage to homes, businesses and farms could not have been predicted.
Notes on the instrument
The instrument provides that the appropriation item listed in column 1 for the Department of Families, Community Services and Indigenous Affairs be increased by the amount listed in column 3. The instrument specifies that the additional amount be provided for the purpose of meeting commitments for assistance to eligible people directly affected by Cyclone Larry.