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Advance to the Finance Minister - section 13 of Appropriation Act (No. 2) 2005-2006 (No. 7 of 2005-2006)

Advance to the Finance Minister - section 13 of Appropriation Act (No. 2) 2005-2006 (No. 7 of 2005-2006)

Administered by Department of Finance

Legislation au F2006L00956 Not in force Legislative Instrument

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Explanatory Statement

Appropriation Act (No. 2) 2005-06, 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. 2) 2005-2006”, dated 24 March 2006 and numbered 7 of 2005-2006.

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) 2005-06, the Advance to the Finance Minister is provided for under section 13. 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 that is not provided for, or is insufficiently provided for, in Schedule 2 (which sets out the amounts appropriated); and

(b) The additional expenditure is not provided for, or is insufficiently provided for, in Schedule 2:

(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 2 of Appropriation Act (No. 2) 2005-06 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 Management Division, in the Department of Finance and Administration to exercise the power provided for under section 13 of Appropriation Act (No. 2) 2005-06.

Purpose of the instrument

The instrument determines that the Administered Assets and Liabilities appropriation for the Department of Environment and Heritage in Appropriation Act (No. 2) 2005-06 be increased by $1,831,781.

Background

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

APPLICATION FOR FUNDS - ADVANCE TO THE FINANCE MINISTER 2005-2006

Agency: Department of Environment & Heritage

Appropriation: Appropriation Act (No. 2) 2005-06

Description: Administered Assets and Liabilities

Description of Outcome: (no outcome)

Source of Available Funds	2003-2004	2004-2005	2005-2006
	$	$	$
Appropriation Act No. 41	0	0	127,000
Appropriation Act No. 21	0	0	0
Retained by AusIndustry2	0	0	133,136
TOTAL FUNDS AVAILABLE3	0	0	133,136

TOTAL EXPENDITURE4	0	0	0

TOTAL UNSPENT FUNDS5	0	0	133,136

1 Appropriations to the REEF programme were reclassified in the 2005-06 Additional Estimates process, from expenses (Act 1) to capital (Acts 2 & 4). Only the unspent portion of the 2005-06 appropriation was reclassified.

2 DEH has delegated administration of the REEF programme to AusIndustry, which has in turn delegated management of the REEF to a private fund manager. The fund manager may at times return funds (sourced ultimately from appropriations to DEH) to AusIndustry, which AusIndustry retains until the fund manager calls for further funds, at which time AusIndustry returns these funds to the fund manager.

3 The Act 4 appropriation will not be available until Act 4 is passed (refer to note 1).

4 As REEF programme appropriations were reclassified in the 2005-06 Additional Estimates process (refer to note 1), no expenditure has been made against Acts 2 or 4.

5 This figure will differ from the figure in CBMS, as it includes funds drawn by DEH, but retained by AusIndustry (refer to note 2).

Funds Required: $1,965,017

Funds Currently Unspent: $133,236

Amount required from AFM: $1,831,781

AFM Category: Appropriation Act (No. 2) 2005-2006 Part 3 13 (1)(b)(ii)

Explanation of requirements from AFM:

The Renewable Energy Equity Fund (REEF) programme provides funding for the Government’s two-thirds shareholding of the CVC REEF Ltd venture capital fund, which invests in small, innovative renewable energy companies. The remaining third of the fund is provided by the private sector.

The Department of Environment and Heritage (DEH) has received from the REEF fund manager a call for $1,965,017, which exceeds the funds available to DEH for the REEF programme in 2005-06. An amount of $127,000 is unspent from the 2005-06 appropriation for this programme, but as it was reclassified in the 2005-06 Additional Estimates process, it will not be available until Appropriation Act (No. 4) 2005-06 is passed. DEH has no other administered capital funds to draw upon. DEH has delegated administration of the REEF programme to AusIndustry, which retains an amount of $133,136 for contribution toward the current call. DEH therefore requires an AFM of $1,831,781.

Urgent:

DEH received a call for funds from the fund manager of the REEF programme, via AusIndustry, on 17 March 2006. Under the MOU between AusIndustry and the AGO (a division of DEH), DEH must pay AusIndustry within seven days. In accordance with the subscriber agreement between AusIndustry and the fund, AusIndustry must pay the fund within 14 days.

Unforeseen:

Under the 10-year REEF program, the Government has a contractual obligation to provide the total of the Government’s share ($17.723 million) to the fund, without reference to the size or timing of payments, which are determined by the fund manager as per their needs, and unrelated to Government annual appropriations to the DEH for the REEF programme. As a commercial venture capital fund, CVC REEF Ltd's needs are driven by investment opportunities and are unpredictable. While it was foreseeable that the fund may at some time make a call in excess of the annual appropriation to DEH, the specific size and timing of such a call was not foreseeable.

Notes on the instrument

The instrument provides that the appropriation item listed in column 1 for the Department of Environment and Heritage be increased by the amount listed in column 3. The instrument specifies that the additional amount be provided for the purpose of meeting a current Australian Government commitment under the Renewable Energy Equity Fund (REEF) programme.

Overview

The Appropriation Act (No. 2) 2005-06, enacted by the Australian Parliament, provides for the appropriation of funds for government expenditure and includes a provision for an advance to the Finance Minister to address urgent and unforeseen expenditure needs. This advance, authorised under section 13, serves as a contingency fund, enabling the Finance Minister to issue amounts up to a limit of $215 million to cover such needs. The purpose of this legislation is to ensure that the government can respond promptly to urgent financial requirements that were not anticipated at the time of the budget's formulation. The explanatory statement outlines the process for issuing an advance, detailing how the appropriation schedules are amended to reflect the additional expenditure. The instrument in question, issued under this authority, specifically addresses a funding shortfall for the Renewable Energy Equity Fund (REEF) programme, highlighting the unpredictable nature of investment needs in venture capital funds and the government's commitment to meeting its contractual obligations.

Scope and Application

The Advance to the Finance Minister instrument, dated 24 March 2006, relates to an appropriation increase for the Department of Environment and Heritage under the Appropriation Act (No. 2) 2005-2006. Authorised by the annual Appropriation Acts, the Advance to the Finance Minister serves as a contingency fund, available to the Finance Minister for urgent funding needs not provided for or insufficiently provided for in the appropriation schedule. The instrument specifically increases the Administered Assets and Liabilities appropriation for the Department of Environment and Heritage by $1,831,781 to meet a funding call for the Renewable Energy Equity Fund (REEF) programme. This urgent and unforeseen expenditure stems from a fund manager call exceeding the available 2005-2006 appropriation for the REEF programme, necessitating additional funds to fulfil the government's contractual obligations to the CVC REEF Ltd venture capital fund. The instrument operates within the Commonwealth jurisdiction, impacting the allocation of federal funds to address urgent and unforeseen expenditures for specific government programmes. The application of this instrument is limited to the appropriation specified and the particular circumstances outlined in the explanatory statement, ensuring that the Advance to the Finance Minister is used as intended for urgent and unforeseen needs. This instrument extends the application of the Appropriation Act by authorising specific appropriations beyond the initial allocation to address immediate funding requirements, while adhering to the legislative thresholds and conditions stipulated in the Act.

Key Provisions

Section 13 of the Appropriation Act (No. 2) 2005-06 allows the Finance Minister to issue an advance from a contingency fund, up to a limit of $215 million, if the Minister is satisfied that there is an urgent need for expenditure not accounted for in Schedule 2, and that this additional expenditure was either omitted or understated due to an error, or was unforeseen until after the Appropriation Bill was introduced into the House of Representatives. The instrument dated 24 March 2006 authorises the specified official within the Department of Finance and Administration to exercise this power. The Act imposes specific obligations on the parties involved. The Finance Minister must ensure that any expenditure from the Advance to the Finance Minister complies with the criteria outlined in section 13. The Department of Environment and Heritage must demonstrate the urgency and unforeseen nature of the additional expenditure required, as evidenced by the application submitted for the Renewable Energy Equity Fund (REEF) programme. The official designated in the instrument must exercise the power to increase appropriations in accordance with the requirements of section 13. Breaches of the requirements set forth in the Act can result in civil or criminal consequences, although the specific penalties are not detailed in the explanatory statement. Generally, misuse of public funds or failure to comply with appropriation laws can lead to legal action, including fines or imprisonment, depending on the severity of the breach. The explanatory statement does not provide explicit maximum penalties, but it implies that non-compliance could result in serious legal repercussions. The instrument dated 12 February 2003, which authorises the official to exercise the power under section 13, ensures that the process is carried out according to legislative requirements. This authorisation underscores the importance of adhering to the criteria for issuing advances from the contingency fund and highlights the need for careful documentation and justification for any additional expenditure. The application from the Department of Environment and Heritage, detailing the urgent and unforeseen nature of the additional funds required for the REEF programme, must be substantiated to meet the legal requirements of the Act.

Area of Law: Finance & Banking Law
Instrument: Statutory Instrument
Concepts: Definitions & Interpretation; Repeal & Amendment; Offence Provisions; Reporting & Disclosure Obligations; Compliance Obligations

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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