Advance to the Finance Minister - section 12 of Appropriation Act (No. 1) 2005-2006 (No. 14 of 2005-2006)

Administered by Department of Finance

Legislation au F2006L01696 Not in force Legislative Instrument

Legislation content

 

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 29 May 2006 and numbered 14 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 1 appropriation for the Australian Maritime Safety Authority in Appropriation Act (No. 1) 2005-06 be increased by $600,000.

Background

The background to the instrument is provided in the application made by the Australian Maritime Safety Authority 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 Maritime Safety Authority 

Appropriation: Appropriation Act (No. 1) 2005-2006

 

Description: Administered expenses – Outcome 1

Description of Outcome: A better transport system for Australia

Source of Available Funds

2003-2004

2004-2005

2005-2006

2-2003

 

$

$

$

 

 

 

 

Appropriation Act No1

Advance to the Minister of Finance

Prior Years Administered Appropriation retention

4,500,000

1,600,000

 

0

5,800,000

0

 

0

6,200,000

0

 

252,287

 

 

 

 

TOTAL FUNDS AVAILABLE

6,100,000

5,800,000

6,452,287

 

 

 

 

TOTAL EXPENDITURE

5,304,682

4,998,982

6,177,340

 

 

 

 

TOTAL UNSPENT FUNDS

795,318

801,018

274,947

 

Funds Required:   $874,947

Funds Currently Unspent:  $274,947

Amount required from AFM:  $600,000

 

AFM Category:  Appropriation Act (No. 1) 2005-2006

   

Explanation of requirements from AFM:

The Australian Maritime Safety Authority (AMSA) receives an Administered Appropriation to meet the expenditure of search and rescue incidents.  This is a Government Community Service Obligation.  Funding of $6,200,000 was provided in the 2005-06 budgets and $6,177,340 has been drawn down to-date to cover invoices received for search and rescue incidents conducted during this financial year.  Prior years administered appropriation retention of $252,287 is also available.  It is estimated that there are $172,947 worth of invoices outstanding for incidents conducted in the past and it is anticipated that an additional $427,053 will be required to meet incidents between now and the end of the year.  If the current number and extent of incidents continue or any large-scale incidents occur in the remainder of the financial year a further AFM application may be required.

Urgent:

AMSA has no discretion as to the timing, extent or nature of incidents and therefore no discretion on the timing of the expenditure.  As lives are at risk there must be an immediate response to every notified incident.

Unforeseen :

Costs of Search and Rescue incidents are demand driven, and contingent on the number, extent and nature of the search and rescue activities.  AMSA has no discretion as to the timing, location, extent or nature of incidents and every incident is different and results in different costs being incurred.  AMSA had a number of major incidents in the early part of the year where the costs were greater than the average cost of an incident. 

While an analysis of the incidents, costs and the associated drawdowns of the Appropriation up to the time when, the Additional Estimates Bills were being prepared indicated that the number and costs of the incidents was up and AMSA, had drawn down more Appropriation than the pro-rata proportion of the Annual Appropriation up to that time it was not possible to rely on this historic information to predict the number, location, extent or costs of the future incidents or to foresee that an additional Appropriation would be required for the 2005/06 financial year.  Historic financial trends are not useful in forecasting the number, or costs, of future incidents. 

Despite the costs and associated drawdowns being greater than the pro-rata proportion of the annual appropriation Additional Estimates time our assessment there was sufficient available remaining appropriation therefore, nothing was included in the Additional Estimates Appropriation Bills.  This assessment was incorrect with the number and costs of incidents since that time being larger than anticipated.

Notes on the instrument

The instrument provides that the appropriation item listed in column 1 for the Australian Maritime Safety Authority be increased by the amount listed in column 3. The instrument specifies that the additional amount be provided for the purpose of meeting commitments in relation to search and rescue incidents.

The outcome text in the instrument is incorrectly noted as ‘Outcome 1 - A better transport system for Australia’.  The outcome text should read, ‘Outcome 1 - Fostering an efficient, sustainable, competitive, safe and secure transport system’.  This is of no detriment to the validity of the instrument.

 

Overview

The Appropriation Act (No. 1) 2005-06, enacted by the Parliament of Australia, provides an essential mechanism for the allocation of funds to various government agencies, including the Advance to the Finance Minister under Section 12. This section was introduced to address the problem of unforeseen and urgent expenditures that were not accounted for in the original budget appropriation. The purpose is to provide a contingency fund that the Finance Minister can utilise when there is an urgent need for additional funds that were either omitted or underestimated in the initial budget. The policy objective is to ensure that the government can respond swiftly to unexpected circumstances without needing to go through the formal legislative process of amending the budget. The explanatory statement for the instrument clarifies the conditions under which funds from this contingency can be accessed and specifies the particular case of increasing the appropriation for the Australian Maritime Safety Authority to meet unforeseen search and rescue incidents. The instrument issued under this Act allows for the appropriation for the Australian Maritime Safety Authority to be increased by $600,000 to cover additional search and rescue expenses for the financial year 2005-06. This increase is necessary due to the demand-driven nature of search and rescue operations, where the number, extent, and costs of incidents are unpredictable. The urgency arises from the critical need to respond immediately to incidents where lives are at risk. The instrument corrects a minor error in the description of the outcome, noting that the intended outcome is "Fostering an efficient, sustainable, competitive, safe and secure transport system" rather than "A better transport system for Australia." Despite this minor discrepancy, the validity and purpose of the instrument remain unaffected.

Scope and Application

The Advance to the Finance Minister, as provided for in Section 12 of the Appropriation Act (No. 1) 2005-06, is a central contingency fund available to the Finance Minister to provide urgent funding to agencies throughout the financial year, subject to specific conditions. This fund can be accessed if the Finance Minister determines there is an urgent need for expenditure not sufficiently provided for in the Appropriation Bill, either due to erroneous omissions or unforeseen circumstances. The provision allows for an increase in appropriation up to a limit of $175 million, with the exercise of this provision having the effect of amending Schedule 1 of the Appropriation Act (No. 1) 2005-06 to accommodate the additional expenditure. The authority to issue such determinations has been delegated to a specified official within the Department of Finance and Administration. This particular instrument, dated 29 May 2006, increases the Administered Expenses appropriation for the Australian Maritime Safety Authority by $600,000 to meet urgent and unforeseen commitments related to search and rescue incidents, highlighting the unpredictable nature of such incidents and the necessity for immediate funding.

Key Provisions

Section 12 of the Appropriation Act (No. 1) 2005-06 provides an important mechanism for the Finance Minister to issue advances to meet urgent and unforeseen expenditure needs. This section empowers the Finance Minister to authorise an advance, up to a maximum of $175 million, if two key conditions are met. Firstly, the Finance Minister must be satisfied that there is an urgent need for expenditure that is not, or is insufficiently, provided for in Schedule 1, which lists the amounts appropriated for the financial year. Secondly, the additional expenditure must not be provided for, or be insufficiently provided for, in Schedule 1 due to either an erroneous omission or understatement, or because the additional expenditure was unforeseen until after the last practicable date to include it in the Appropriation Bill. When an advance is issued under this section, it has the effect as if Schedule 1 of the Act had been amended to include the additional expenditure. The Act imposes several obligations on the Finance Minister in exercising the power provided by section 12. The Minister must be satisfied, based on reasonable grounds, that the two conditions mentioned above are met. This involves a careful assessment of the urgency and unforeseen nature of the expenditure. The Minister must also ensure that the total amount advanced does not exceed the $175 million limit specified in the Act. Moreover, the Minister must issue a determination detailing the additional expenditure and the reasons for issuing the advance. This determination must be made in good faith and based on the best available information at the time. Failure to comply with the requirements of the Act can result in legal consequences. However, the Act itself does not explicitly outline specific offences or penalties for non-compliance. Instead, any breaches of the Act's provisions may be subject to general legal remedies available under Australian administrative law. This could include judicial review where a decision by the Minister is found to be unlawful, irrational, or procedurally unfair. In such cases, the court may issue a declaration, an injunction, or order a re-consideration of the decision. The precise legal consequences would depend on the specific circumstances of the breach and the applicable legal principles. In summary, section 12 of the Appropriation Act (No. 1) 2005-06 provides a critical tool for the Finance Minister to address urgent and unforeseen expenditure needs, subject to certain conditions and limits. The Minister must exercise this power judiciously, ensuring compliance with the Act's requirements. While the Act does not prescribe specific penalties for non-compliance, breaches may still be subject to legal consequences under general administrative law principles.

Legal classification tags

Area of Law
Finance & Banking Law
Instrument
Statutory Instrument
Concepts
Definitions & Interpretation
Offence Provisions
Reporting & Disclosure Obligations

Interactions

Authorises

All Versions

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.