Explanatory Statement
Appropriation Act (No. 1) 2006-2007, 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) 2006-2007”, dated 1 February 2007 and numbered 2 of 2006-2007.
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) 2006-2007, 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) 2006-2007 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) 2006-2007.
Purpose of the instrument
The instrument determines that the Administered Expenses – Outcome 3 appropriation for the Department of Foreign Affairs and Trade in Appropriation Act (No. 1) 2006-2007 be increased by $8,989,493.
Background
The background to the instrument is provided in the application made by the Department of Foreign Affairs and Trade for funding from the Advance to the Finance Minister. The application is reproduced below.
APPLICATION FOR FUNDS - ADVANCE TO THE FINANCE MINISTER 2006-07
Agency: Department of Foreign Affairs and Trade (DFAT)
Appropriation: Appropriation Act (No. 1) 2006-2007
Description: Administered Expenses – Outcome 3
Description of Outcome: Public understanding in Australia and overseas of Australia’s foreign and trade policy and positive image of Australia internationally.
Source of Available Funds | 2004-2005 | 2005-2006 | 2006-2007 |
$ |
|
| |
|
|
| |
Appropriation Act (No. 1) | 48,621,000 | 28,846,000 | 4,241,000 |
Section 8 Retention | 1,711,557 | 519,829 | 0 |
Advance to the Finance Minister | 0 | 0 | 8,989,493 |
Other | 1,997,380 | 1,017,078 | 0 |
Lapsed Appropriation | 0 | 0 | 0 |
Appropriation Act (No. 3) | 0 | 9,956,000 | 0 |
TOTAL FUNDS AVAILABLE | 52,329,937 | 40,338,907 | 13,230,493 |
|
|
|
|
TOTAL EXPENDITURE | 51,635,734 | 39,761,663 | 12,802,443* |
|
|
|
|
TOTAL UNSPENT FUNDS | 694,203 | 577,244 | 428,050 |
* cash spent as at 23 January 2007
Funds Required: $ 9,417,543
Funds currently unspent: $ 428,050
Amount required for AFM: $ 8,989,493
AFM Category: Appropriation Act (No. 1) 2006-07 Part 3 12 (1)(b)(ii)
Explanation of requirements from AFM:
In December 2005 Cabinet selected the Australian Broadcasting Corporation (ABC) as the preferred provider for Australia’s television service to the Asia Pacific region. The Department of Foreign Affairs and Trade (DFAT) reached agreement with the ABC on the terms of the contract for the delivery of the Australia Network programme in August 2006. These terms include the schedule of payments and timing for payments. The first payment under the contract was due on 8 August 2006, when the Australia Network programme commenced. At the time of the budget process there was no agreement on financial or legal obligations and it was agreed that the funding would be resolved through Ministers. The first and second financial instalments of the contract fall due before 2006-07 Additional Estimates. An AFM provided DFAT with funding to meet the first payment in August 2006. DFAT is now requesting funding to meet the second payment due on 4 February 2007 in accordance with the contract.
Urgent:
The Commonwealth’s previous five year contract with the ABC for the management of the Asia Pacific regional television service expired on the 7 August 2006. The new contract came into effect on the 8 August 2006.
Appropriation Act (No.1) 2006-07 does not provide sufficient funding for Outcome 3 to cover the first and second instalments payable in accordance with the schedule of payments of the new contract. Any payment delay could imperil the delivery of this programme to which the Australian Government has committed and consequently Australia’s image in the Asia Pacific region. Additionally any delay would compromise Australia’s reputation to meet its financial obligations.
Unforeseen:
Following Cabinet’s decision, DFAT initiated negotiations in order to deliver the new Australia Network television service to the Asia Pacific region. Negotiations on the financial terms for the Australia Network contract were not completed until June 2006. Accordingly, the expenditure obligation in relation to the first and second instalment payments to the ABC was not known at the time that Appropriation Bill (No.1) 2006‑07 was finalised in May 2006.
Notes on the instrument
The instrument provides that the appropriation item listed in column 1 for the Department Foreign Affairs and Trade be increased by the amount listed in column 3. The instrument specifies that the additional amount be provided to meet a commitment in relation to a contract payment to the Australian Broadcasting Corporation to provide Australian television in the Asia Pacific region.