Explanatory Statement
Appropriation Act (No. 1) 2008-2009, Section 14 – 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 14 of Appropriation Act (No. 1) 2008-2009”, dated 24 November 2008 and numbered 2 of 2008-2009.
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.
In Appropriation Act (No. 1) 2008-2009, the Advance to the Finance Minister is provided for under section 14. The discretionary power is exercisable upon the Finance Minister’s satisfaction of the matters specified in section 14. 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 is contained in subsections 14(1)(a) and (b) of that Act. This application 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) 2008-2009 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 the Bureau of Meteorology in Appropriation Act (No. 1) 2008-2009 be increased by $20,000,000. The additional amount is provided to enable payments under the Australian Government Modernisation and Extension of Hydrologic Monitoring Systems Program.
Background
The background to the instrument is provided in the application made by the Bureau of Meteorology for funding from the Advance to the Finance Minister. The application is reproduced below.
APPLICATION FOR ADVANCE TO THE FINANCE MINISTER - 2008-2009
Agency: Bureau of Meteorology
Appropriation: Appropriation Act (No. 1) 2008-2009
Description: Administered Expenses
Outcome: Outcome 1: Australia benefits from meteorological and related science and services
Source of Available Appropriations | 2006-2007 | 2007-2008 | 2008-2009 |
$ | $ | $ | |
Appropriation Act (No. 1) 2008-2009 | - | - | - |
TOTAL APPROPRIATIONS AVAILABLE | - | - | - |
|
|
|
|
TOTAL AMOUNT SPENT | - | - | - |
TOTAL UNSPENT APPROPRIATIONS | - | - | - |
Appropriations Required: $ 20,000,000.00
Appropriations Available: $ 0.00
Amount required from AFM: $ 20,000,000.00
AFM Category: Appropriation Act (No.1) 2008-2009, Part 3, Section 14, (1)(a)
Explanation of requirements from AFM:
The Bureau of Meteorology (Bureau) was appropriated $20 million under Appropriation Act (No. 2) 2008-2009 for the Australian Government Modernisation and Extension of Hydrologic Monitoring Systems Program (the Program). The objective of the Program, as originally set out in the National Plan for Water Security, is to “assist water data collecting agencies (public and private)” to modernise and extend their water resource monitoring systems.
Funding for this program was incorrectly included in Appropriation Act (No. 2) 2008-2009 due to a misunderstanding of the intended recipients – use of the term “agencies” was mistakenly interpreted as relating to only State and Territory Government agencies. As projects are evaluated on a competitive tender basis via merit based selection, recipients of funding under this program can include both public and private sector entities as named in the Water Regulations 2008 as made under the Water Act 1997.
The Finance Minister has agreed that funding for this program ought to be provided under Appropriation Act 1 and as a consequence, provision has been made in Appropriation Bill (No. 3) 2008-2009 for the current financial year and Appropriation Bill 1 in future financial years.
Urgent:
Due to the error in the budgetary process, the Bureau has no relevant appropriation item under Appropriation Act (No. 1) 2008-2009 to allow the Program to function as per government policy. Funding under Appropriation Bill (No. 3) 2008-2009 will not be available until royal assent occurs; this is not expected until April 2009. The urgency of the request relates to the following two types of Program payment activities that will occur in 2008-09.
The first payment type of $1.54 million, approved by the Minister for Climate Change and Water in late 2007-2008, is for the appointment of water information co-ordinators in each State and the Northern Territory. The relevant co-ordinators have either provided signed funding deeds awaiting counter signature by the Bureau or are expecting the Bureau to resume negotiation of contractual terms. These funding deeds indicate initial payments due on contract signature, early November 2008, with progressive milestone payments throughout the financial year. All contracts expire on the 30 June 2009, each contract having varying milestone achievement and payment dates.
The second payment type of $18.46 million, is for grant recipients whose applications are currently being assessed. The call for Program grant applications closed on the 17th October 2008 and proposals with a total value of over $43 million were received. Subject to approval by the Minister for Climate Change and Water in November 2008, the first payments will be due in December of this year. Further payments linked to milestone achievements, will be scheduled throughout the financial year as per best practice recommendations. All contracts will expire on the 30 June 2009, each contract having varying milestone achievement and payment dates.
Erroneous Omission:
In order to complete the Program, funding should have been provided under Appropriation Act
(No. 1) 2008-2009. Unfortunately poor use of the term “agencies” led to the Program being funded as a Special Purpose Payment (SPP) under Appropriation Act (No. 2) 2008-2009. In effect this means that the moneys can only be used to fund public sector entities instead of the intended beneficiaries, which include all those public and private entities named in the Water Regulations 2008.