Advance to the Finance Minister - section 12 of Appropriation Act (No. 1) 2005-2006 (No. 16 of 2005-2006)

Overview

The Appropriation Act (No. 1) 2005-06 was enacted to address the need for urgent and unforeseen expenditure requirements within the Australian Government. This Act, passed by the Australian Parliament, aims to provide a contingency fund to meet immediate financial needs that are not adequately covered by the annual budget. One of its key provisions is the Advance to the Finance Minister, which allows for the allocation of additional funds up to a specified limit if certain conditions are met. The instrument dated 9 June 2006, numbered 16 of 2005-2006, amends the appropriation for the Administered Expenses, Outcome 5, for the Department of Families, Community Services and Indigenous Affairs by $5,160,059 to meet urgent and unforeseen expenses arising from the impact of Cyclone Larry. This funding is crucial to ensure the timely delivery of one-off income support to farmers and small business owners affected by the disaster, as well as other commitments under Outcome 5. The policy objective is to provide necessary financial support swiftly to mitigate the adverse effects of unforeseen events.

Scope and Application

The Appropriation Act (No. 1) 2005-06 establishes an Advance to the Finance Minister, which is a contingency fund available to the Finance Minister for urgent expenditures not adequately covered in the Appropriation Act. The Act allows for the issuance of funds from this advance, up to a maximum of $175 million, if the Finance Minister determines that there is an urgent need for expenditure not accounted for or insufficiently accounted for in the Act's appropriations schedules, either due to an erroneous omission or understatement, or because the additional expenditure was unforeseen until after the last practical opportunity to include it in the Appropriation Bill. The exercise of this provision is facilitated through a determination that has the effect of amending the appropriations schedule to include the additional expenditure specified. The instrument, dated 9 June 2006, authorises the SES Band 2, Financial Management Group, within the Department of Finance and Administration to exercise the power under section 12 of the Appropriation Act (No. 1) 2005-06. It determines an increase of $5,160,059 to the Administered Expenses, Outcome 5 appropriation for the Department of Families, Community Services and Indigenous Affairs to meet urgent commitments, particularly for assistance to individuals affected by Cyclone Larry. This application is based on an urgent need to provide financial support to farmers and small business owners impacted by the cyclone, with calculations indicating a daily requirement of approximately $113,000 until the next anticipated release of funds in June 2006.

Key Provisions

Section 12 of the Appropriation Act (No. 1) 2005-06 allows the Finance Minister to issue an advance from a central contingency fund, up to a limit of $175 million, when there is an urgent need for expenditure that is not provided for or is insufficiently provided for in the appropriation schedule. This provision can be used if the expenditure is either due to an erroneous omission or understatement in the schedule, or because it was unforeseen until after the last practicable opportunity to include it in the Appropriation Bill. The issuance of such an advance has the effect of amending the appropriation schedule to include the additional expenditure specified in the determination made by the Finance Minister. The Act imposes specific conditions that must be met before the Finance Minister can exercise this power. The Minister must be satisfied that there is an urgent need for the expenditure and that it is either due to an omission, understatement, or unforeseen circumstances that occurred after the last practicable opportunity to include it in the appropriation schedule. Additionally, the Act authorises the SES Band 2, Financial Management Group, in the Department of Finance and Administration to exercise this power on behalf of the Finance Minister. Failure to comply with the conditions set out in the Act could lead to various consequences, though the Act itself does not specify particular offences, penalties, or consequences for non-compliance. However, misuse of the Advance to the Finance Minister could potentially result in legal or administrative repercussions, such as inquiries or investigations into the allocation and use of funds. The Act mandates that any use of the contingency fund must adhere strictly to the conditions outlined to ensure proper fiscal management and accountability. The instrument dated 12 February 2003 specifies that the Administered Expenses, Outcome 5 appropriation for the Department of Families, Community Services and Indigenous Affairs in the Appropriation Act (No. 1) 2005-06 is increased by $5,160,059. This increase is to meet urgent needs arising from commitments related to Cyclone Larry, such as providing one-off income support to farmers and small business owners affected by the disaster. The urgency stems from the anticipated release of funds from Appropriation Bill No 5 near the end of June 2006, and the potential exhaustion of current funding by 9 June 2006 if additional funds are not allocated. The additional funds are necessary to cover Cyclone Larry-related costs and other commitments under Outcome 5.