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 25 June 2009 and numbered 9 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 an erroneous omission.
Exercise of the power via the issue of a determination has effect as if Schedule 2 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 State, ACT, NT and local government item for Outcome 1 for the Department of Infrastructure, Transport, Regional Development and Local Government in Appropriation Act (No. 2) 2008‑2009 be increased by $29,016,740. The additional amount is provided to enable payments under the Nation Building 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 1: Assisting the Government to provide, evaluate, plan and invest in infrastructure across industry sectors.
Source of Available Appropriations | 2006-2007 | 2007-2008 | 2008-2009 |
$ | $ | $ | |
Appropriation Act (No. 2) 2008-2009 | 0 | 0 | 2,471,297,000 |
Appropriation (Nation Building and Jobs) Act (No. 2) 2008-2009 | 0 | 0 | 230,000,000 |
Appropriation Act (No. 6) 2008-2009 | 0 | 0 | 391,989,000 |
TOTAL APPROPRIATIONS AVAILABLE | 0 | 0 | 3,093,286,000 |
|
|
|
|
TOTAL AMOUNT SPENT | 0 | 0 | 2,916,065,575 |
TOTAL UNSPENT APPROPRIATIONS | 0 | 0 | 177,220,425 |
Appropriations Required: $206,237,165
Appropriations Available: $177,220,425
Amount required from AFM: $ 29,016,740
AFM Category: Appropriation Act (No. 2) 2008-2009 Part 3 15(1)(b)
Explanation of requirements from AFM:
The Nation Building Program and the Nation Building Plan for the Future initiatives contribute to the Government’s commitment to support employment through small to medium scale infrastructure projects and building the nations long term economic capacity. These initiatives aim to increase the efficiency and safety of Australia’s land transport infrastructure whilst strengthening the Australian economy.
The program includes payments to States and Territories, Local Governments and to Commercial Entities for land transport infrastructure projects. The mix of grant recipients results in payments from a combination of appropriations between Appropriation Act (No. 1) and Appropriation Act (No. 2). The program includes predicting the expense profiles for construction projects and the mix of payments between appropriations. The nature of the program makes it difficult to accurately determine the final outcome of the program until close to the end of the financial year when final claims from recipients are received and assessed. The AFM is required to facilitate the payments of $29.017 million under the Nation Building Program for Appropriation Act (No. 2)2008-09.
Urgent:
The Department requires AFM as there are insufficient appropriations available to make grant payments to meet the Government’s contractual obligations under the Nation Building Program for projects under Appropriation Act (No. 2)2008-09.
Current funding under Appropriation Act (No.2) 2008-09 for Outcome 1 totals only $3,093.3 million and is provided for the suite of Nation Building Programs with payments to the States and Territories. To date, $2,916.1million has been paid, with the remaining payments of $206.2 million to be made before 30 June 2009.
In Error
The need for expenditure to occur is a result of an error in profiling the correct appropriation mix for the Nation Building Program when the last bills for 2008-09 were tabled in February 2009. Although the program is not fully spent in Appropriation Bill (No. 1), the final outcome reveals a shortfall under Appropriation Act (No.2). The error occurs due to the final outcome of expenditure not being known until late in the financial year combined with the nature of construction projects which makes the accuracy of predicting expenditure difficult to determine.