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 7 June 2006 and numbered 15 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 $400,000.
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: Fostering an efficient, sustainable, competitive, safe and secure transport system
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 | 6,200,000 600,000
252,287 |
|
|
|
|
TOTAL FUNDS AVAILABLE | 6,100,000 | 5,800,000 | 7,052,287 |
|
|
|
|
TOTAL EXPENDITURE | 5,304,682 | 4,998,982 | 6,729,406 |
|
|
|
|
TOTAL UNSPENT FUNDS | 795,318 | 801,018 | 322,881 |
Funds Required: $722,881
Funds Currently Unspent: $322,881
Amount required from AFM: $400,000
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 an AFM for $600,000 approved on 29 May 2006. $6,729,406 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 $561,107 worth of invoices outstanding for incidents conducted in the past. If the current number and extent of incidents since the last AFM application 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 not predictable this pattern of larger more expensive incidents has continued into the second half of the year.
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 a useful tool 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 was that, while minimal there was sufficient available appropriation remaining therefore, nothing was included in the Additional Estimates Appropriation Bills. This situation also applied in respect to the Supplementary Additional Estimates and for the previous AFM.
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.