Advance to the Finance Minister – Section 13 of Appropriation Act (No. 1) 2009-2010 (No. 1 of 2009-2010)

Explanatory Statement

Appropriation Act (No. 1) 2009-2010, Section 13 – 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 13 of Appropriation Act (No. 1) 2009-2010”, dated 18 January 2010 and numbered 1 of 2009-2010.

The legislative authority under which the instrument is made

The Advance to the Finance Minister (AFM) is a provision contained in the annual Appropriation Acts. It enables the Finance Minister to facilitate urgent and unforeseen expenditure that was not within the contemplation of Parliament when the Appropriation Act was passed and is therefore not provided for in Schedule 1 of the Appropriation Act. 

The Advance to the Finance Minister is provided for under section 13 of Appropriation Act (No. 1) 2009-2010.   The discretionary power is exercisable upon the Finance Minister’s satisfaction of the matters specified in section 13. This section indicates that amounts can be issued from the Advance to the Finance Minister, up to a limit of $295 million, if the Finance Minister is satisfied that there is an urgent need for expenditure, in the current year, that is not provided for, or is insufficiently provided for, in Schedule 1 of that Act. The qualifying circumstances on the discretion of the Finance Minister to issue additional amounts under this provision are contained in subsections 13(1) (a) and (b) of that Act.  The application from the Department of the Treasury has satisfied the Finance Minister that the additional expenditure was not provided for because of an erroneous omission.

Exercise of the power via the issue of a determination has effect as if Schedule 1 of Appropriation Act (No. 1) 2009-2010 were amended to make provision for the additional expenditure specified in the determination.

Purpose of the instrument

The instrument determines that the Administered Item for Outcome 1 for the Department of the Treasury in Appropriation Act (No. 1) 2009-2010 be increased by $29,675,000.  The additional amount is provided to enable the payment of an additional contribution to the International Monetary Fund Poverty Reduction and Growth Trust.

Background

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

APPLICATION FOR ADVANCE TO THE FINANCE MINISTER - 2009-2010

Agency: Department of the Treasury

Appropriation: Appropriation Act (No. 1) 2009-2010

Description: Administered item

Outcome: Outcome 1 - Informed decisions on the development and implementation of policies to improve the wellbeing of the Australian people, including by achieving strong, sustainable economic growth, through the provision of advice to government and the efficient administration of federal financial relations

Appropriation Required: $ 30,000,000.00

Appropriations Uncommitted: $ 325,000.00

Amount required from AFM: $ 29,675,000.00

AFM Category:

-          erroneous omission or understatement – “Appropriation Act (No. 1) 2009-2010, Part 3, section 13 (1)(a)”

Explanation of requirements from AFM:

During the MYEFO 2009-10 estimates round the Government announced an additional contribution to the International Monetary Fund (IMF) Poverty Reduction and Growth Trust in the form of a single payment of $30.0 million.  At the time the estimate was entered into CBMS under the existing International Monetary Agreements Act 1947 - s8 - Payments to the IMF appropriation item under the advice that the provision was appropriate for the additional contribution.

It was recently identified that the specific section of the Act was not an appropriate source of funding for this payment and that no existing section of the Act would be appropriate.  The estimate should have been entered through the annual appropriations.

Urgent:

The IMF has requested payment of the additional contribution on 15 January 2010 which would not leave scope for the normal budget process.

The total anticipated payments will be a single payment of the full $30.0 million on 15 January 2010.

Erroneous Omission

This expenditure was erroneously entered into CBMS under the incorrect appropriation source due to an incorrect judgment on the correct appropriation source.  The measure should have been entered into the annual appropriation bills.