Explanatory Statement
Appropriation Act (No. 2) 2008-2009, Section 15 – 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 15 of Appropriation Act (No. 2) 2008-2009”, dated 23 February 2009 and numbered 4 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 2 of the Appropriation Act.
In Appropriation Act (No. 2) 2008-2009, the Advance to the Finance Minister is provided for under section 15. The discretionary power is exercisable upon the Finance Minister’s satisfaction of the matters specified in section 15. This section indicates that amounts can be issued from the Advance to the Finance Minister, up to a limit of $380 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 2 of that Act. The qualifying circumstances on the discretion of the Finance Minister to issue additional amounts under this provision is contained in subsections 15(1)(a) and (b) of that Act. This application satisfied the Finance Minister that the additional expenditure was not provided for because of unforeseen circumstances.
Exercise of the power via the issue of a determination has effect as if Schedule 2 of Appropriation Act (No. 2) 2008-2009 were amended to make provision for the additional expenditure specified in the determination.
Purpose of the instrument
The instrument determines that the State, ACT, NT and local government item for Outcome 3 for the Department of Infrastructure, Transport, Regional Development and Local Government in Appropriation Act (No. 2) 2008-2009 be increased by $206,500,247. The additional amount is provided to enable payments to local governments through the Regional and Local Community Infrastructure Program.
Background
The background to the instrument is provided in the application made by the Department of Infrastructure, Transport, Regional Development and Local Government for funding from the Advance to the Finance Minister. The application is reproduced below.
APPLICATION FOR ADVANCE TO THE FINANCE MINISTER - 2008-2009
Agency: Department of Infrastructure, Transport, Regional Development and Local Government
Appropriation: Appropriation Act (No. 2) 2008-2009
Description: Payments to States, ACT, NT and local government
Outcome: Outcome 3: Assisting regions and local government to develop and manage their futures.
Source of Available Appropriations | 2006-2007 | 2007-2008 | 2008-2009 |
$ | $ | $ | |
Appropriation Act (No. 2) 2008-2009 | 0 | 0 | 14,200,000 |
TOTAL APPROPRIATIONS AVAILABLE | 0 | 0 | 14,200,000 |
|
|
|
|
TOTAL AMOUNT SPENT | 0 | 0 | 7,133,498 |
TOTAL UNSPENT APPROPRIATIONS | 0 | 0 | 7,066,502 |
Appropriations Required: $213,567,749
Appropriations Available: $ 7,066,502
Amount required from AFM: $206,500,247
AFM Category: Appropriation Act (No. 2) 2008-2009, Part 3 15(1)(b)
Explanation of requirements from AFM:
On 18 November 2008, the Prime Minister announced the government would make an immediate provision for $300 million to local governments through the Regional and Local Community Infrastructure Program (RLCIP) to build local infrastructure and help support local economies and jobs during the global financial crisis. This announcement comprised two packages; $250 million for Local government regional and local community infrastructure fund and $50 million for Local government strategic projects infrastructure fund. The AFM is required to facilitate the immediate payment of $210 million under the Local government regional and local community infrastructure fund.
Urgent:
The Department requires AFM as there are insufficient appropriations available to make grant payments to meet the government’s commitment under the Regional and Local Community Infrastructure Program (RLCIP) which are due before the Additional Estimates appropriation bills are expected to receive royal assent in April 2009.
The Government committed to providing immediate funding of $300 million to local governments through the Regional and Local Community Infrastructure Program (RLCIP) to build local infrastructure and help support local economies and jobs during the global financial crisis.
Current funding under Appropriation Act (No. 2) 2008-09 for Outcome 3 totals only $14.2 million and is provided for the Supplementary funding to South Australian councils for local roads program. To date, the first two payments totaling $7.133 million have been paid, with the remaining two payments to be made in February and May 2009. The February payment of $3.567 million is due to be made on the 16th February 2009 and has therefore been taken into account in determining the amount sought under this AFM.
Applications for grants under RLCIP close on the 30th January 2009 with payments commencing as early as the 17th February 2009. It is anticipated that payments totalling approximately $210 million will be required to be made, up until the end of March 2009, prior to Appropriation Bill (No. 4) 2008- 09 receiving royal assent.
Unforeseen:
The need for expenditure to occur arose as a result of the Prime Minister’s announcement on 18 November 2008 to provide funding of $300 million to local governments through the Regional and Local Community Infrastructure Program to build local infrastructure and help support local economies and jobs during the global financial crisis. As that decision did not occur until after the finalisation of Appropriation Bill (No. 2) 2008‑2009, it was not possible to include this amount in that bill and the expenditure was therefore unforeseen.