Explanatory Statement

Section 15 Appropriation Act (No. 2) 2011-2012

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) 2011-2012”, dated 5 December 2011 and numbered 1 of 2011-2012.

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.

The Advance to the Finance Minister is provided under section 15 of Appropriation Act (No. 2) 2011-2012. The discretionary power is exercisable upon the Finance Minister’s satisfaction of the matters specified in section 15. This section provides 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 are contained in subsections 15(1) of that Act. The application from the Department Regional Australia, Regional Development and Local Government (Regional Australia) has satisfied the Finance Minister that the additional expenditure was not provided for due to unforeseen circumstances.

Exercise of the power via the issue of a determination has effect as if Schedule 2 of Appropriation Act (No. 2) 2011-2012 were amended to make provision for the additional expenditure specified in the determination.

Purpose of the instrument

The instrument determines that the Payments to States, Act, NT and local government Item for Outcome 1 for Regional Australia in Appropriation Act (No. 2) 2011-2011 be increased by $41.881 million. The additional amount is provided to enable Regional Australia to meet legal commitments under funding arrangements that fall due before the passage of the next annual Appropriation Acts.

Background

The background to the instrument is provided in the application made by Regional Australia for funding from the Advance to the Finance Minister, reproduced below.

APPLICATION FOR ADVANCE FROM THE FINANCE MINISTER

2011-12

Agency: Department of Regional Australia, Regional Development and Local Government

Appropriation:  Appropriation Act (No. 2) 2011-12

Description: State, ACT, NT and local government item, Outcome 1

Outcome: Coordinated community infrastructure and services in rural, regional and local government areas through financial assistance.

Appropriation Required: $ 48.854M

Appropriations Available: $ 6.973M

Amount required from AFM: $ 41.881 M

AFM Category:

Unforeseen – “Appropriation Act (No. 2) 2011-2012, Part 3, section 15 (1)(b)”

Explanation of requirements from AFM:

The extreme weather conditions of late 2010 and early 2011 impacted on infrastructure projects administered by the Department of Regional Australia, Regional Development and Local Government in Queensland, New South Wales, Victoria and Western Australia.  Initial assessment of delays resulted in the approval of a movement of funds of $40.0 million from
2010-11 to 2011-12 for the Regional and Local Community Infrastructure Program as part of the 2011‑12 Budget process. The funding was provided in Appropriation Act (No. 2)2011-2012 under Outcome 1. As the full extent of these delays become known, a further movement of $53.125 million was approved in September 2011 to be provided in Appropriation Bill (No. 4) 2011-2012 for:

• East Kimberley Development Package, $1.625 million;
• Regional and Local Community Infrastructure Program, $49.500 million; and
• Thornton Park Commuter Car Park, $2.000 million.

Urgent:

Based on the latest cashflow projections, funding provided in Appropriation Act (No. 2) 2011-2012 will be exhausted by the end of November 2011.  Appropriation Act (No. 4) 2011-2012 will be tabled later this financial year and will not be available until it receives Royal Ascent expected in mid April 2012.  An advance of $41.881 million is required to meet legal commitments under funding arrangements as they fall due.

Unforeseen:

Advice was provided to Government that movements of funds may be required once the full extent of project delays due to the flooding in Queensland, New South Wales, Victoria and Western Australia was known. These impacts were not fully evident until the 2011-12 Budget process was complete. A movement of funds was then sought as the full extent of delays became known.