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 22 June 2007 and numbered 5 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 Payments to States, ACT, NT and local government – Outcome 1 appropriation for the Department of Agriculture, Fisheries and Forestry in Appropriation Act (No. 2) 2006-2007 be increased by $57,110,565.
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 2006-2007
Agency: Australian Government Department of Agriculture, Fisheries and Forestry
Appropriation: Appropriation Act (No. 2) 2006-2007
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 | 2004-2005 | 2005-2006 | 2006-2007 |
$ | $ | $ | |
Retained prior year Appropriations |
|
| 14,394,145 |
Appropriation Act (No. 2) | 464,986,000 | 309,807,000 | 360,106,000 |
Appropriation Act (No. 4) | (47,072,000) | 334,137,000 | 222,469,000 |
Appropriation Act (No. 6) | (27,475,000) |
| - |
Section 32 transfer |
|
| (23,894,000) |
Section 32 transfer |
|
| 2,375,000 |
TOTAL FUNDS AVAILABLE | 390,439,000 | 643,944,000 | 575,450,145 |
|
|
|
|
TOTAL EXPENDITURE | 326,084,157 | 485,632,153 | 567,129,782 |
|
|
|
|
TOTAL UNSPENT FUNDS | 64,354,843 | 158,311,847 | 8,320,363 |
Funds Required: $65,430,928
Funds Currently Unspent: $8,320,363
Amount required from AFM: $57,110,565
AFM Category: Appropriation Act (No. 2) 2006-2007 Part 3 13 (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 payment by 30 June 2007 of funds to States for a variety of items under Appropriation Act (No. 2) 2006-2007.
Significant funds have been expended in providing for an increased take up in drought related exceptional circumstances assistance payments in areas which have been declared or extended since the finalisation of Appropriation Bill (No. 6) 2006-2007. The Department is therefore seeking additional funds totaling $57.1 million to allow these payments to be made before 30 June 2007.
Urgent:
The Department is planning to make an estimated $65.4 million in payments before the end of the financial year. As at 20 June 2007, the Department has funding available of $8.3 million. Payments for a number of programmes are due before 30 June 2007 and are almost exclusively for reimbursement to States for expenditure already incurred on behalf of the Commonwealth. There is a risk that the States will not make payments to farmers for exceptional circumstances payments and possibly blame the Australian Government for not providing the funds.
Unforeseen:
Exceptional circumstances declarations approved after the finalisation of the Additional Estimates bills were considered in the preparation of the Supplementary Additional Estimates bills. No additional funding was provided for in the Supplementary Additional Estimates bills as new measures for exceptional circumstances totaling $54.6 million were capable of being funded from underspends within other programmes.
Since that time, there has been a significant increase in the take up of exceptional circumstances assistance in areas which have been declared or expanded due to the severity and extended duration of the drought, increased government advertising, and promotion through the drought bus. The programme is demand driven and a further $61.5 million in payments is required by 30 June 2007 to meet the unforeseen increase in take-up of drought related assistance.
Signed By Chief Finance Officer
| |
NAME: | JOHN BRIDGE |
SIGNATURE: |
|
DATE: | 21 June 2007 |