Advance to the Finance Minister – section 12 of Appropriation Act (No. 1) 2005-2006 (No. 9 of 2005-2006)

Administered by Department of Finance

Legislation au F2006L01013 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 30 March 2006 and numbered 9 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 $12,201,000. 

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: Families, Community Services and Indigenous Affairs

 

Appropriation: Appropriation Act (No. 1) 2005-06

 

Description: Administered expenses – Outcome 5

 

Description of Outcome: Stronger 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

 

 

 

 

TOTAL FUNDS AVAILABLE

 

 

68,587,000

 

 

 

 

TOTAL EXPENDITURE

 

 

52,899,000

 

 

 

 

TOTAL UNSPENT FUNDS

 

 

15,899,000

 

Funds Required:   $28,100,000.00

Funds Currently Unspent:  $15,899,000.00

Amount required from AFM:  $12,201,000.00

 

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 announcement that ex-gratia assistance be made available to eligible people directly affected by Cyclone Larry where their principal place of residence has been destroyed or has been rendered uninhabitable.

 

The purpose of this ex-gratia assistance is to help individuals and families in recognition of the trauma and stress caused to people by the loss of their principal place of residence.

Given the devastation caused by Cyclone Larry the Prime Minister agreed to provide ex-gratia payments to assist those whose principal place of residence has been destroyed or rendered uninhabitable for a period of at least two weeks.

 

Finance has agreed to a cost of $20,000,000 for these payments.

 

Also required are funds for a one-off grant of $100,000 to the Queensland State Government Relief Fund, for victims of the cyclone.

 

Latest information to hand is that approximately 12,000 claims have been lodged, equating to approximately $14 million.  On current trends, it is likely that the estimated cost will be an underestimate.

 

It is likely that sometime this week (week beginning 26 March 2006), that funds in Outcome 5 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 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 within the next two weeks.

 

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 could not have been predicted.

 

 

 

Overview

The Appropriation Act (No. 1) 2005-06, enacted by the Parliament of Australia, addresses the need for urgent and unforeseen expenditures that are not initially provided for in the appropriation schedules. Specifically, Section 12 of this Act allows for an advance to the Finance Minister to serve as a contingency fund to meet such requirements. This provision is critical in ensuring that the government can respond swiftly to unexpected events, such as natural disasters, without the need for immediate legislative amendments. The policy objective is to maintain fiscal flexibility and ensure that essential services and aid can be provided promptly to those in need. The explanatory statement clarifies that the issuance of funds from the Advance to the Finance Minister is subject to the Finance Minister's satisfaction that the expenditure is both urgent and unforeseen, thereby reinforcing the accountability and transparency of the fund's use.

Scope and Application

The Appropriation Act (No. 1) 2005-06 provides for the allocation of funds to the Finance Minister as an Advance, which serves as a central contingency fund for urgent funding needs of various agencies throughout the financial year. Under Section 12 of this Act, the Finance Minister is authorised to issue amounts up to a limit of $175 million if satisfied that there is an urgent need for expenditure not provided for or insufficiently provided for in the appropriations schedule, due to an erroneous omission, understatement, or unforeseen circumstances. This provision allows for the issuance of funds for additional expenditure, effectively amending the appropriations schedule as if it were amended by the Act itself. The instrument dated 30 March 2006, numbered 9 of 2005-2006, specifically determines an increase of $12,201,000 for the Administered Expenses, Outcome 5 appropriation for the Department of Families, Community Services and Indigenous Affairs, to cover urgent ex-gratia payments for individuals affected by Cyclone Larry. The application for funds from the Advance to the Finance Minister highlights the urgent need for additional appropriations to meet the unforeseen and immediate requirements arising from the cyclone's devastation. The Department of Families, Community Services and Indigenous Affairs required these funds to provide ex-gratia payments to those whose homes were destroyed or rendered uninhabitable by Cyclone Larry. The total estimated cost of these payments was agreed to be $20,000,000, with a one-off grant of $100,000 to the Queensland State Government Relief Fund for cyclone victims. Given the urgency and the high number of claims already being processed, the additional funds were deemed necessary to prevent the exhaustion of the Outcome 5 appropriation before the end of the financial year.

Key Provisions

The key provision of the instrument is found in section 12 of the Appropriation Act (No. 1) 2005-06, which allows for an advance to the Finance Minister of up to $175 million in cases of urgent, unprovided-for expenditure (section 12(1)). The instrument specifically determines an increase of $12,201,000 to the Administered Expenses, Outcome 5 appropriation for the Department of Families, Community Services and Indigenous Affairs (section 12(2)). This increase is to be used for ex-gratia payments to those affected by Cyclone Larry and a one-off grant to the Queensland State Government Relief Fund. The obligations imposed by the Act on the parties it governs are primarily centred around the urgent and unforeseen nature of the required expenditure. The Finance Minister must be satisfied that there is an urgent need for the expenditure and that it is not provided for in Schedule 1 of the Act, either due to an erroneous omission or because it was unforeseen until after the last practicable opportunity to include it in the Appropriation Bill (section 12(1)(a) and (b)). The issuing of a determination by the authorised officer under the Act is treated as if Schedule 1 had been amended to include the additional expenditure (section 12(4)). There are no explicit offences, penalties, or civil/criminal consequences outlined in the Act for breaches of the provisions regarding the Advance to the Finance Minister. However, the misuse of funds or failure to comply with the conditions under which the advance is granted could potentially lead to scrutiny by the relevant parliamentary committees and might result in political or administrative consequences for the responsible officers or departments. The Act itself focuses more on the procedural aspects of how the advance can be used rather than on punitive measures for non-compliance.

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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.