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
Source of Available Appropriations | 2007-2008 | 2008-2009 | 2009-2010 |
| $ | $ | $ |
Appropriation Act (No. 1) | - | - | 1,000,000.00 |
TOTAL APPROPRIATIONS AVAILABLE | - | - | 1,000,000.00 |
| | | |
TOTAL AMOUNT SPENT | - | - | 21,533.74 |
TOTAL UNSPENT APPROPRIATIONS | - | - | 978,466.26 |
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.
Signed By Chief Finance Officer |
NAME: (block capitals please) | |
SIGNATURE: | |
DATE: | |
Overview
The Appropriation Act (No. 1) 2009-2010, enacted by the Australian Parliament, addresses the need for urgent and unforeseen expenditure not initially considered in the annual budget. Section 13 of the Act provides the Finance Minister with the authority to facilitate such expenditures up to a specified limit of $295 million, provided there is a demonstrated urgent need for the expenditure. This discretionary power is exercised upon the Minister's satisfaction of specific conditions outlined in the Act, particularly when the expenditure arises from an erroneous omission. The policy objective is to ensure that the government can respond to unforeseen circumstances without the delay inherent in the regular budget process. In this instance, the Advance to the Finance Minister was used to make an additional contribution to the International Monetary Fund Poverty Reduction and Growth Trust due to an administrative oversight in the initial budget allocation.
Scope and Application
The Appropriation Act (No. 1) 2009-2010, specifically Section 13, provides the Finance Minister with the authority to facilitate urgent and unforeseen expenditure not originally contemplated by Parliament at the time of the Act's passage, thereby allowing for flexibility in financial management to address unforeseen circumstances. This discretionary power is limited to a maximum of $295 million and is exercisable when the Finance Minister is satisfied that there is an urgent need for such expenditure within the current financial year that is either not provided for or inadequately provided for in Schedule 1 of the Act. The recent instrument, "Advance to the Finance Minister – Section 13 of Appropriation Act (No. 1) 2009-2010", dated 18 January 2010, demonstrates the application of this provision. In this instance, the Finance Minister approved an increase of $29,675,000 for the Administered Item for Outcome 1 of the Department of the Treasury to cover an additional contribution to the International Monetary Fund Poverty Reduction and Growth Trust, which was erroneously omitted from the original appropriation schedule. This increase is effective as if Schedule 1 of the Act had been amended to include the additional expenditure.
Key Provisions
The main operative section of this legislation is section 13 of the Appropriation Act (No. 1) 2009-2010, which allows the Finance Minister to issue an advance of up to $295 million for urgent and unforeseen expenditure not provided for in the original Appropriation Act. This provision enables the Finance Minister to address immediate needs that were not anticipated at the time of the Act’s passage, provided that specific conditions are met. The Finance Minister must be satisfied that the expenditure is urgent and not adequately covered in Schedule 1 of the Appropriation Act (subsections 13(1)(a) and (b)). In this instance, the instrument issued under this section has increased the Administered Item for Outcome 1 of the Department of the Treasury by $29,675,000 to meet an additional contribution to the International Monetary Fund Poverty Reduction and Growth Trust, which was erroneously omitted from the initial appropriation.
The Act imposes several obligations on the Finance Minister and relevant government departments. The Finance Minister must ensure that any advance issued under section 13 is justified by urgent and unforeseen circumstances, and the expenditure must not have been adequately provided for in the original appropriation schedule. The Department of the Treasury, in this case, must submit an application detailing the necessity for the additional funds, including a justification for why the expenditure was not initially included in the appropriation schedule. This application must satisfy the Finance Minister that the conditions of section 13 are met. Additionally, the Act requires that the additional expenditure be clearly specified in the determination issued by the Finance Minister, which has the effect of amending Schedule 1 of the Appropriation Act as if the additional expenditure had been provided for originally.
Failure to comply with the requirements set out in the Appropriation Act (No. 1) 2009-2010 can result in civil or criminal consequences, depending on the nature and severity of the breach. While the explanatory statement does not detail specific penalties, breaches of financial management and appropriation laws can generally lead to significant administrative, civil, or criminal penalties. Civil penalties may include fines, while criminal penalties could involve imprisonment, reflecting the seriousness of mismanaging public funds. The maximum penalties would depend on the specific nature of the breach and any relevant statutory provisions or common law principles applicable at the time of the offence. It is essential for all parties involved to adhere strictly to the provisions and requirements of the Act to avoid such consequences.