Advance to the Finance Minister – section 12 of Appropriation Act (No. 1) 2006-2007 (No. 8 of 2006-2007)

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Legislation au F2007L02027 Not in force Legislative Instrument

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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 27 June 2007 and numbered 8 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, in the current year, 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 Bill for this Act before that 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 Reporting and Cash Management Division 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 1 appropriation for the Department of Immigration and Citizenship in Appropriation Act (No. 1) 2006-2007 be increased by $1,250,000.

Background

The background to the instrument is provided in the application made by the Department of Immigration and Citizenship for funding from the Advance to the Finance Minister.  The application is reproduced below.

 

 

APPLICATION FOR FUNDS - ADVANCE TO THE FINANCE MINISTER 2006-2007

 

Agency:                Department of Immigration and Citizenship 

Appropriation:  Appropriation Act (No. 1 ) 2006-2007

 Department of Immigration and Multicultural Affairs
 

Description:          Administered expenses – Outcome 1

Description of Outcome:   Contributing to Australia’s society and its economic advancement
                                             through the lawful and orderly entry and stay of people 

Source of Available Funds

2004-05

2005-06

2006-07

 

$

$

$

Appropriation Act (No. 1)

102,930,000

75,242,000

44,209,000

Appropriation Act (No. 3)

336,000

 

 

Appropriation Act (No. 5)

 

 

261,000

TOTAL FUNDS AVAILABLE

103,266,000

75,242,000

44,470,000 1

 

 

 

 

TOTAL EXPENDITURE

53,992,010

44,341,990

42,277,293 1

 

 

 

 

TOTAL UNSPENT FUNDS

49,273,990

30,900,010

2,192,707

1 up to and including 25 June 2007 net of 2005-06 sec 8 funding and expenditure
 

Funds Required:   $  3,442,707

Funds Currently Unspent:  $  2,192,707

Amount required from AFM:  $  1,250,000

AFM Category:  Appropriation Act (No. 1) 2006-2007 Part 3 12 (1)(b)(ii)

Explanation of requirements from AFM:

The additional funding from the Advance to the Finance Minister is required to cover operational costs of the Offshore Processing Centre in Nauru during 2006-07.

DIAC’s Administered Expenses appropriation for Outcome 1 includes the line item Offshore management of asylum seekers.  This item, which includes a provision of $22.093 million for 2006-07, provides funding for the maintenance of the Offshore Processing Centres on Nauru and Manus Island.  The Centres are under the control of the International Organization for Migration and have effectively been vacant since late 2005.  The 2006-07 Budget provision was to maintain the Centres in a mothballed, ready response capacity only.  No funding was provided to cover operational costs in 2006-07 as any new unauthorised boat arrivals/asylum seekers would be accommodated and processed at the Australian Government operated facilities on Christmas Island (funded from DIAC’s Departmental outputs appropriation).

In late 2006 the Government announced that eight Rohingyan unauthorised boat arrivals who arrived in Australia in August 2006 would be transferred to Nauru for processing of their asylum claims.  The operational cost to manage the Rohingyan caseload was assessed as minor and could be accommodated within the 2006-07 Budget funding provision for Nauru.

In March 2007 the Government announced that the 82 Sri Lankan’s intercepted off Christmas Island in February 2007 would also be transferred to Nauru for processing of their asylum claims.  The duration of their stay on Nauru, and the associated operational costs for the Nauru centre in 2006-07 were not known up to the time Appropriation Bill No. 5 was closed for further funding bids. 

The 2006-07 Budget was framed on the basis that all new unauthorized boat arrivals will be processed on Christmas Island.  While the decision to transfer processing to Nauru will result in additional operational costs for Nauru, there will be corresponding savings from the Departmental appropriation for processing on Christmas Island.

If additional funding is not provided the Commonwealth will not be able to pay accounts due before 30 June 2007.

Urgent:

The current unspent funding available against this appropriation is expected to be exhausted during the last week in June.  As at 25 June 2007 DIAC had a balance of funds of $2.192 million available and an estimated $3.442 million in accounts payable before 30 June 2007.

Unforeseen :

Funding in 2006-07 for the centre in Nauru was intended to cover mothballed maintenance only.  It was not foreseen at the time the Appropriations Bills No.1 and No. 3 were finalised that the government would send the additional asylum seekers to Nauru to have their claims processed.  Similarly it was not possible to estimate the additional funding required for the Nauru operations at the time Appropriation Bill No. 5 was finalised.

 

Signed by Acting Chief Finance Officer

NAME: (block capitals please)

NHAN VO-VAN

SIGNATURE:

 

DATE:

25 June 2007

 

 

 

Overview

The Appropriation Act (No. 1) 2006-2007, enacted by the Parliament of Australia, provides for the appropriation of funds to the government for various purposes, including the establishment of an Advance to the Finance Minister (AFM) to address urgent and unforeseen expenses. This legislative instrument is designed to ensure that the government can meet its financial obligations promptly when unexpected expenses arise during the financial year. The Act was introduced to address the problem of unforeseen expenses that are not accounted for in the initial appropriation schedules, ensuring that the government can respond to urgent needs without delay. The policy objective is to provide a contingency fund that allows the Finance Minister to issue additional funds when necessary, up to a specified limit, to cover such unforeseen or urgent expenditures. The explanatory statement outlines an instrument dated 27 June 2007 that authorises an increase in the Administered Expenses appropriation for the Department of Immigration and Citizenship to cover operational costs of the Offshore Processing Centre in Nauru for the 2006-07 financial year. The additional funding was required due to the unforeseen transfer of asylum seekers to Nauru for processing, which was not anticipated when the appropriation bills were finalised. Without this funding, the government would be unable to meet its financial obligations by the end of the financial year.

Scope and Application

The Appropriation Act (No. 1) 2006-2007, through section 12, authorises the Finance Minister to make an advance up to a maximum of $175 million to meet urgent and unforeseen expenditure requirements not accounted for in the Act’s Schedule 1. This authority is specifically designed to address situations where there is an immediate need for additional funding due to either erroneous omissions or understatements in the appropriations schedule, or because the additional expenditure was unforeseen until after the last practicable opportunity to include it in the appropriations bill. The provision is exercised through the issuance of a determination, which effectively amends Schedule 1 of the Act to account for the specified additional expenditure. The instrument in question, dated 27 June 2007, determines that the Administered Expenses – Outcome 1 appropriation for the Department of Immigration and Citizenship in the Appropriation Act (No. 1) 2006-2007 be increased by $1,250,000 to cover the operational costs of the Offshore Processing Centre in Nauru, which were not accounted for in the original budget. The decision to transfer additional asylum seekers to Nauru for processing created an unforeseen need for additional funding, which could not have been anticipated at the time the appropriations bills were finalised.

Key Provisions

The Appropriation Act (No. 1) 2006-2007, under section 12, authorises the Finance Minister to issue amounts from an Advance to the Finance Minister, up to a limit of $175 million, if the Minister is satisfied that there is an urgent need for additional expenditure that is not covered or is insufficiently covered in Schedule 1 of the Act. This additional expenditure must be due to either an erroneous omission or understatement in the appropriation schedule, or because the need for the expenditure was unforeseen until after the last practicable opportunity to include it in the Bill for this Act (section 12(1)). The issuance of such amounts is treated as an amendment to Schedule 1, as if it were formally included in the appropriation process. The Act imposes obligations on the Finance Minister to ensure that any funds issued from the Advance to the Finance Minister meet the specified criteria of urgency and unforeseen nature. The Minister must also ensure that the total amount issued does not exceed the $175 million limit and that the funds are used for the intended purpose as outlined in the determination. The Finance Minister has delegated the authority to exercise this power to a specified individual in the Department of Finance and Administration, who is authorised to issue determinations that adjust the appropriations as necessary. Failure to comply with the requirements of the Act, or misusing the Advance to the Finance Minister, could lead to legal consequences. While the Act does not specify detailed penalties, breaches could potentially result in legal action for mismanagement of public funds, which could attract criminal charges under broader public administration laws. The maximum penalties for such offences could include substantial fines and imprisonment, depending on the severity and intent of the breach. Additionally, any misuse of the Advance to the Finance Minister could lead to disciplinary actions against the responsible officials and require the return of misused funds, further reinforcing the seriousness of adhering to the Act's provisions.

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