Advance to the Finance Minister – section 12 of Appropriation Act (No. 2) 2007-2008 (No. 5 of 2007-2008)

Administered by Department of Finance

Legislation au F2008L00401 Not in force Legislative Instrument

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Explanatory Statement

 

Appropriation Act (No. 2) 2007-2008, 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. 2) 2007-2008”, dated 11 February 2008 and numbered 5 of 2007-2008.

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. 2) 2007-2008, 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 $215 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 2 of Appropriation Act (No. 2) 2007-2008 were amended to make provision for the additional expenditure specified in the determination.

Purpose of the instrument

The instrument determines that the Administered payments to States, ACT, NT and local government – Outcome 1 appropriation for the Department of Agriculture, Fisheries and Forestry in Appropriation Act (No. 2) 2007-2008 be increased by $73,226,278. The additional amount is provided to assist primary producers and small businesses adversely affected by drought and for payments to the States under the Emergency Animal Disease Response Agreement for the eradication of equine influenza.

Background

The background to the instrument is provided in the application made by the Department of Agriculture, Fisheries and Forestry for funding from the Advance to the Finance Minister.  The application is reproduced below.

 

 

 

 

APPLICATION FOR FUNDS - ADVANCE TO THE FINANCE MINISTER 2007-2008

 

Agency: Australian Government Department of Agriculture, Fisheries and Forestry

 

Appropriation: Appropriation Act (No. 2) 2007-2008

 

Description:  Administered Payments to the States, ACT, NT and local government - Outcome 1

 

Description of Outcome: More sustainable, competitive and profitable Australian agricultural, food, fisheries and forestry industries

Source of Available Funds

2005-2006

2006-2007

2007-2008

 

$

$

$

Retained prior year Appropriations

 

14,394,145

 

Appropriation Act (No. 2)

309,807,000

360,106,000

489,495,000

Appropriation Act (No. 4)

334,137,000

222,469,000

-

Appropriation Act (No. 6)

 

-

-

Advance to the Finance Minister

 

57,110,565

 

Section 32 transfer

 

(23,894,000)

 

Section 32 transfer

 

2,375,000

 

TOTAL FUNDS AVAILABLE

643,944,000

632,560,710

489,495,000

 

 

 

 

TOTAL EXPENDITURE

485,632,153

617,380,399

475, 47,278

 

 

 

 

TOTAL UNSPENT FUNDS

158,311,847

15,180,311

14,023,722

 

Funds Required:              $87,250,000

Funds Currently Unspent              $14,023,722

             

Amount required from AFM:              $73,226,278

 

AFM Category:    Appropriation Act (No. 2) 2007-2008 Part 3 Section 12 (1)(b)(ii)


Explanation of requirements from AFM:

The Department of Agriculture, Fisheries and Forestry (the Department) requires funds from the Advance to the Finance Minister to allow payments in February 2008 of funds for the various Administered Programs under Appropriation Act (No. 2) 2007-2008 and for new measures that have been approved by Government since May 2007. 

 

There have been a number drought related and equine influenza assistance packages since the finalisation of Appropriation Bill (No. 2) 2007-2008 and subsequently approved as part of the 2007-08 MYEFO process. Significant funds have been expended in providing for these, particularly for the Drought exceptional circumstances interest rate subsidies assistance, Equine Influenza Emergency Animal Disease Response Agreement, the National Action Plan for Salinity and Water Quality and the National Landcare programs.  The Department is therefore seeking additional funds totaling $73.226 million to allow payments to continue to be made for programs under Appropriation Act (No.2) 2007-2008 during February 2008 prior to the anticipated availability of funding from the supplementary additional estimates appropriations bill: Appropriation (Drought and Equine Influenza Assistance) Bill (No. 2) 2007-2008 which is not expected to be available before late February 2008.

 

Urgent:

The Department is planning to make an estimated $87.250 million in payments in February 2008.  As at 31 January 2008, the Department has funding available of $14.023 million. Payments for a number of programs are due in February 2008 and are almost exclusively for reimbursement to States for expenditure already incurred on behalf of the Commonwealth.

 

Unforeseen:

Since the 2007-08 Budget, there has been a significant increase in the take up of drought assistance announced by the Government. There has also been the widespread outbreak of equine influenza with considerable funding being provided to assist the horse industry cope with the economic consequences. These were unforeseen at the time of the preparation of the 2007-08 Budget and no funding was provided for these additional requirements.

 

 

Signed By Chief Finance Officer

 

NAME:

JOHN BRIDGE

SIGNATURE:

 

DATE:

7 February 2008

 

 

Overview

The Appropriation Act (No. 2) 2007-2008 was enacted to provide for the appropriation of funds to the Commonwealth of Australia for the financial year ending 30 June 2008 and for related purposes. One of the key provisions of this Act is the Advance to the Finance Minister, which allows for additional funding to be provided to address urgent and unforeseen expenditures. This mechanism is designed to address gaps in funding that arise due to unforeseen circumstances or errors in the appropriation process, ensuring that critical government services and programs can continue without interruption. The policy objective of this Act is to provide the necessary financial flexibility to meet unexpected demands and maintain the delivery of government services. The explanatory statement outlines the specific use of the Advance to the Finance Minister under section 12 of the Act, which allows the Finance Minister to issue funds up to a limit of $215 million if there is an urgent need for expenditure not provided for in the appropriations schedule. In this instance, the Department of Agriculture, Fisheries and Forestry applied for an additional $73,226,278 to cover urgent payments related to drought assistance and equine influenza response, which were unforeseen at the time of the budget preparation. This additional funding is necessary to ensure continuity in the delivery of government services and support to primary producers and small businesses adversely affected by drought, as well as for payments to states under the Emergency Animal Disease Response Agreement.

Scope and Application

The instrument, entitled “Advance to the Finance Minister – Section 12 of Appropriation Act (No. 2) 2007-2008”, dated 11 February 2008 and numbered 5 of 2007-2008, is authorised by the annual Appropriation Acts and provides for an urgent funding mechanism that allows for additional expenditure not accounted for in the initial appropriation schedules. This provision is specifically intended to address unforeseen circumstances or erroneous omissions in the budget, with the Finance Minister having the authority to issue funds from an Advance to the Finance Minister, up to a limit of $215 million, upon satisfaction that the expenditure is both urgent and unforeseen. The instrument in question allocates an additional $73,226,278 to the Administered payments to States, ACT, NT, and local government – Outcome 1 appropriation for the Department of Agriculture, Fisheries and Forestry to facilitate payments for drought relief and equine influenza response efforts. The funds are necessary due to the unforeseen nature of the drought and equine influenza outbreaks, which were not anticipated at the time of the 2007-08 Budget preparation, and to ensure continuity of payments before supplementary appropriations become available.

Key Provisions

Section 12 of the Appropriation Act (No. 2) 2007-2008 provides for an advance to the Finance Minister, allowing for additional expenditure in urgent and unforeseen circumstances. This section permits the issuance of funds up to a limit of $215 million, provided that the Finance Minister is satisfied that there is an urgent need for expenditure not provided for in Schedule 1 of the Act. The additional expenditure must either be due to an erroneous omission or understatement in Schedule 1, or it must be an unforeseen expenditure that could not be included in the Bill before it was introduced into the House of Representatives. The issuance of funds under this provision is exercised via a determination that has the effect of amending Schedule 2 of the Act to include the additional expenditure specified. The obligations imposed by this Act on the Finance Minister include the requirement to be satisfied of the urgency and unforeseen nature of the additional expenditure before issuing funds. The Minister must ensure that the expenditure meets the criteria outlined in section 12 and must exercise the provision in a manner consistent with the legislative intent. The obligations also extend to the Department of Agriculture, Fisheries and Forestry, which must apply for funds from the Advance to the Finance Minister and justify the need for the additional expenditure, providing detailed explanations of the circumstances leading to the requirement for additional funds. There are no explicit offences or penalties for breach of the provisions in Section 12 of the Appropriation Act (No. 2) 2007-2008. However, the consequences of misapplying funds or failing to meet the criteria for additional expenditure could include financial mismanagement or misallocation of public resources, which may lead to scrutiny, investigation, and potential disciplinary actions against the responsible officials. The lack of specific penalties in the Act underscores the importance of adhering to the criteria set forth to maintain the integrity and effectiveness of the contingency fund.

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