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 6 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 2 appropriation for the Department of Transport and Regional Services in Appropriation Act (No. 2) 2006-2007 be increased by $4,967,491.
Background
The background to the instrument is provided in the application made by the Department of Transport and Regional Services 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 Transport and Regional Services
Appropriation: Appropriation Act (No. 2) 2006-2007
Description: Administered Payments to the States, ACT, NT and local government
Outcome 2
Description of Outcome: Assisting regions to manage their own futures
Source of Available Funds | 2004-2005 | 2005-2006 | 2006-2007 |
$ | $ | $ | |
Appropriation Act No. 2 | 157,754,000 | 172,607,000 | 167,716,000 |
TOTAL FUNDS AVAILABLE | 157,754,000 | 172,607,000 | 167,716,000 |
TOTAL EXPENDITURE | 130,235,692 | 140,743,822 | 73,253,346 |
TOTAL UNSPENT FUNDS | 27,518,308 | 31,863,178 | 94,462,654 |
Funds Required: $ 99,430,145
Funds Currently Unspent: $ 94,462,654
Amount required from AFM: $ 4,967,491
AFM Category: Appropriation Act (No. 2) 2006-2007 Part 3 13 (1)(b)(ii)
Explanation of requirements from AFM:
This administered expense appropriation provides for a range of programmes, including: the Natural Disaster Relief and Recovery Arrangements (NDRRA), Natural Disaster Mitigation, Bushfire Mitigation, Payment to ACT - compensation for the effects of National Capital Influences, Payment to ACT - assistance for water and sewerage services, and Supplementary funding to South Australian Councils for local roads programmes.
The amount required from the Advance to the Finance Minister relates to the NDRRA programme. The arrangements under the programme are designed to alleviate the financial burden on states and territories and support the provision of financial assistance to communities affected by bushfires, cyclones, storms and other natural disasters. The NDRRA is demand driven, with expenditure varying from year to year according to the number and severity of natural disaster events. Queensland have sought $95.7 million for reimbursement of the state government’s costs associated with several natural disaster events, with the majority of funding relating to tropical cyclones Larry and Monica. This is higher than the amount of $86.9 million provided for under this appropriation. An AFM of $4.9 million is sought to cover this shortfall, the balance of which has been funded from savings within other programmes.
Urgent:
The Department is planning to make an estimated $99.4 million in payments before the end of the financial year, including $3.7 million mainly relating to the Natural Disaster Mitigation and Bushfire Mitigation programmes. As at 21 June 2007, the Department has funding available of $94.5 million. All claims need to paid by 30 June 2007.
Unforeseen:
Payments under the NDRRA programme are made in response to claims from the states and territories that vary from year to year according to the number and severity of natural disaster events. Therefore, it is difficult to anticipate the level of claims that will be made at the time the appropriation bills are finalised.
Signed by Chief Financial Officer
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NAME: | SIMON A ASH |
SIGNATURE: |
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DATE: | 21 JUNE 2007 |