Explanatory Statement
Appropriation Act (No. 2) 2006-2007, 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) 2006-2007”, dated 4 June 2007 and numbered 3 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. 2) 2006-2007, 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, in the current year, 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 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) 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 13 of Appropriation Act (No.2) 2006-2007.
Purpose of the instrument
The instrument determines that the Administered Expenses – Outcome 1 appropriation for the Department of Health and Ageing in Appropriation Act (No. 2) 2006-2007 be increased by $12,026,000.
Background
The background to the instrument is provided in the application made by the Department of Health and Ageing 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 Health and Ageing
Appropriation: Appropriation Act (No. 2) 2006-2007
Payments to the States, ACT, NT and local government
Description: Administered expenses – Outcome 1
Description of Outcome: The incidence of preventable mortality, illness and injury in Australians is minimised
Source of Available Funds | 2004-2005 | 2005-2006 | 2006-2007 |
$ | $ | $ | |
Appropriation Act (No. 2) | 210,006,000 | 253,217,000 | 236,139,000 |
Appropriation Act (No. 4) | 6,463,000 | - | - |
Prior Year Section 8 Retention | - | - | 3,357,807 |
TOTAL FUNDS AVAILABLE | 216,469,000 | 253,217,000 | 239,496,807 |
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TOTAL EXPENDITURE | 205,937,000 | 219,836,000 | 232,189,035 1 |
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TOTAL UNSPENT FUNDS | 10,532,000 | 33,381,000 | 7,307,772 |
1 Expenditure as at 30 May 2007
Funds Required: $19,333,772
Funds Currently Unspent: $7,307,772
Amount required from AFM: $12,026,000
AFM Category:
Appropriation Act (No. 2) 2006 –2007 Payments to States, ACT, NT and local government Part 3 13 (1)(b)(ii)
Explanation of requirements from AFM:
On 28 November 2006 a decision was made to fund the purchase of Human Papillomavirus vaccine (HPV). However, this decision only authorised the purchase of vaccines under the special appropriation and determined that there needed to be a comeback on the actual implementation costs, including payments to the States And Territories. In February 2007 it was decided to provide $16,180,000 in 2006-07 to pay States and Territories to administer the vaccine as provision of the vaccines to school children is provided through the public school system and funded by State and Territories. The addition of this commitment to other commitments under Appropriation Act (No. 2) 2006-2007 for Payments to States, ACT, NT and local government means that there will be insufficient funds to cover the Australian Government’s remaining liabilities.
Urgent:
The Department is required to make approximately $19,333,772 in payments before the end of the financial year, with $13,600,000 due by 7 June 2007. The balance of payments will be made throughout June 2007. As at 30 May 2007, the Department has funding available of $7,307,772.
This shortfall in funding is due to the unforeseen payment of $16,180,000 for HPV in February 2007, of which funding of $12,026,000 is provided in Appropriation Bill (No. 6) 2006-2007, which has yet to receive royal assent. The balance of $4,154,000 comes from savings identified by the Department during the financial year.
An Advance to the Finance Minister of $12,026,000 is required in order to facilitate payments that are due before the anticipated royal assent of Appropriation Bill (No. 6) 2006-2007.
Unforeseen:
The decision to provide additional funding of $16,180,000 for HPV was made after the preparation of the Additional Estimates Bills and could not, therefore, be appropriated in Appropriation Act (No. 4) 2006-2007. Although partial funding for this item is included in Appropriation Bill (No. 6) 2006-2007, the Department is required to make various payments prior to royal assent being given to this Bill.
Signed By Chief Finance Officer
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