Advance to the Finance Minister - section 12 of Appropriation Act (No. 1) 2005-2006 (No. 11 of 2005-2006)

Administered by Department of Finance

Legislation au F2006L01084 Not in force Legislative Instrument

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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:

 

  1. ex-gratia assistance to people directly affected by Cyclone Larry where their principal place of residence has been destroyed or has been rendered uninhabitable. 
  2. funds for a one-off grant of $100,000 to the Queensland State Government Relief Fund for victims of the cyclone.
  3. 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.
  4. 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.

Overview

The Appropriation Act (No. 1) 2005-06, enacted in 2005, provides the legislative framework for the appropriation of funds by the Australian government. The Act was introduced to ensure that the government has the necessary financial resources to meet its obligations and commitments throughout the financial year. Specifically, Section 12 of the Act addresses the provision of an advance to the Finance Minister, which serves as a central contingency fund to provide urgent funding to various agencies when necessary. The Act was enacted by the Parliament of Australia with the objective of managing the nation's financial resources efficiently and effectively. The explanatory statement relates to an instrument under Section 12 of the Appropriation Act (No. 1) 2005-06, which authorises an advance to the Finance Minister to meet urgent and unforeseen expenditure needs. This particular instrument, dated 5 April 2006, determines an increase in the Administered Expenses, Outcome 5 appropriation for the Department of Families, Community Services and Indigenous Affairs by $16,805,593. This funding is intended to support the urgent requirements arising from Cyclone Larry, which affected numerous families, businesses, and farms. The additional funds will ensure that commitments to provide ex-gratia assistance, grants, and income support to those impacted by the cyclone can be fulfilled without interruption.

Scope and Application

The Appropriation Act (No. 1) 2005-06 provides for the Advance to the Finance Minister, a contingency fund available to the Finance Minister to address urgent and unforeseen expenditure needs throughout the financial year. Specifically, section 12 of the Act authorises the issue of funds from this contingency account, up to a maximum of $175 million, if the Finance Minister determines that there is an urgent need for expenditure not adequately covered by the initial appropriation schedule. Such determinations may be made when additional expenditure arises due to erroneous omissions or understatements in the initial appropriation or because the expenditure was unforeseen until after the Appropriation Bill was introduced into the House of Representatives. The instrument issued under section 12, dated 5 April 2006, authorises the exercise of this power by a specified official within the Department of Finance and Administration and determines an increase of $16,805,593 for the Administered Expenses, Outcome 5 appropriation for the Department of Families, Community Services and Indigenous Affairs. This increase is intended to meet the urgent needs arising from Cyclone Larry, which caused unforeseen damage and necessitated immediate financial support to affected individuals and businesses. The application for funds highlights the urgent requirement for additional financial resources to fulfil government commitments to cyclone victims, including ex-gratia payments, grants to relief funds, and income support for affected farmers and business owners.

Key Provisions

The main sections of the Appropriation Act (No. 1) 2005-06 that are relevant here are Section 12, which authorises an Advance to the Finance Minister. This section allows the Finance Minister to issue funds up to a maximum of $175 million in urgent circumstances when there is a necessity for expenditure not included in Schedule 1 of the Act. This can occur either due to an erroneous omission or understatement in the appropriations, or because the expenditure was unforeseen until it was no longer practicable to include it in the Appropriation Bill. Section 12(1)(b)(ii) specifically addresses situations where additional expenditure is required due to unforeseen circumstances, such as natural disasters. In this case, the Act allows the Finance Minister to issue an amount from the Advance to the Finance Minister, effectively amending Schedule 1 as if the additional expenditure had been included in the original appropriation. The obligations imposed by the Act on the Finance Minister include ensuring that any funds issued from the Advance to the Finance Minister are only used in circumstances where there is an urgent need for expenditure that is not provided for in Schedule 1 of the Appropriation Act. The Finance Minister must be satisfied that the expenditure is genuinely unforeseen and necessary, and that there is no other source of funding available. Additionally, the Finance Minister must ensure that any funds issued are within the statutory limit of $175 million. The Act also mandates that any determination to issue funds from the Advance to the Finance Minister must be exercised by an authorised official within the Department of Finance and Administration, as specified in an instrument dated 12 February 2003. There are no specific offences, penalties, or consequences detailed in the explanatory statement for the breach of the provisions in Section 12 of the Appropriation Act (No. 1) 2005-06. However, any misuse or improper allocation of funds from the Advance to the Finance Minister could potentially lead to legal consequences under other sections of the Appropriation Acts or related legislation. The potential misuse could result in disciplinary actions against public officers, financial penalties, or other administrative consequences. It is important for the Finance Minister and authorised officials to adhere strictly to the conditions set out in Section 12 to avoid any legal repercussions.

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Area of Law
Finance & Banking Law
Instrument
Statutory Instrument
Concepts
Definitions & Interpretation
Repeal & Amendment
Ex-gratia payments

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.