28 March 2019
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Dinty Mather and Jonathan Chowns
Economic Policy Section
Several mechanisms are included within the
Commonwealth Budget to provide flexibility to the Government for dealing with,
or reflecting, unforeseen or unexpected occurrences.
One of those mechanisms is the Advance to the Finance
Minister (AFM), which provides a flexible source of appropriation that may,
subject to certain conditions, be expended on any purpose the Government
chooses.
Another mechanism—the Contingency Reserve—adjusts the presentation
of the overall budget balance to reflect the general tendency of programs to cost
more than anticipated, and for certain known contingencies that the Government
considers likely to occur. The Contingency Reserve is the subject of another Quick
Guide.
The AFM attracted attention in 2017 when its use to
conduct the same-sex marriage postal ballot by the Australian Bureau of
Statistics (ABS) was the subject of a High Court challenge.
Advances generally
In the first Appropriation Act passed by the Australian
Parliament (the Appropriation
Act 1901–02) the Parliament provided for an advance to the Treasurer of
£100,000. The stated purpose of the advance was:
To enable the Treasurer to make advances to Public Officers
and to pay expenses of an unforeseen nature which will afterwards be submitted
for Parliamentary Appropriation ...[1]
Such advances continued to be provided for in subsequent Appropriation
Acts.
For the 1978–79 financial year the Parliament began
providing an advance to the Finance Minister instead of the Treasurer (Advance
to the Finance Minister or AFM); reflecting the split in 1976 of the Department
of the Treasury and the creation of the Department of Finance.[2]
How it works
Section 10 of the Appropriation Act
(No. 1) 2018–2019 illustrates how the AFM works (the relevant
provisions are reproduced at the end of this Quick Guide).
Subsection 10(2) allows the Finance Minister to make a
Determination under the AFM mechanism. The Determination is non-disallowable
legislative instrument.
The Determination records the schedule to which an additional
allocation is being made and the amount.
The Determination is deemed to have the same effect as if
the Appropriation Act were amended to increase the appropriation to the
entity by that amount.
The Finance Minister may make a Determination only if they
are satisfied that there is an urgent need for expenditure, in the current
year, that is not provided for, or is insufficiently provided for already, in
the Appropriation Act because:
- something was omitted or understated in error or
- the expenditure was unforeseen at the last moment that it was
possible to include it as an item in the Appropriation Bill prior to
introduction.
A similar provision is found in Appropriation
Act (No. 2) 2018–2019, the difference being that the Appropriation Bill
(No. 1) deals with the ‘the ordinary annual services of the Government’ and
Appropriation Bill (No. 2) concerns ‘other annual services of the Government’.
Typically,
the AFM is established in the first Appropriation Acts each year and
then replenished, if needed, whenever supplementary Appropriation Acts
are passed.
The Finance Minister may not make Determinations for amounts
that total more than the cap set in subsection 10(3) of the Appropriation
Act (No. 1).
The amounts for appropriation to the AFM in 2018–19 were:
The Appropriation Bills for the Parliamentary Departments
make similar provision for advances to the responsible Presiding Officers—the
President of the Senate and the Speaker of the House of Representatives with
respect to the parliamentary departments.
A list of Determinations made by Finance Ministers including
their amount and purpose is provided at Table 1. At the time of writing, one Determination
has been by the Finance Minister for the 2018–19 Budget year.
High Court consideration
In the Advance to the
Finance Minister Determination (No. 1 of 2017–2018), made on 9 August 2017,
the Finance Minister determined that a payment of $122 million be made to the
Australian Bureau of Statistics (ABS) from the Advance to the Finance Minister.
The Explanatory
Statement to the Determination explains that this payment was made so that
the ABS could conduct a voluntary, postal, plebiscite on the subject of
same-sex marriage. The ABS had an existing statutory authority to carry out
that type of work and to spend money to do so under section 9 of the Census and
Statistics Act 1905 (Cth) and section 13 of the Census and Statistics
Regulation 2016 (Cth).
In Wilkie
v Commonwealth the Member for Denison, Andrew Wilkie, and others
challenged this use of the AFM on several grounds. These included that the use
set out in the Finance Ministers’ Determination on that occasion did not
satisfy the criteria set out in subsection 10(1) of the Appropriation Act (No. 1) 2017–2018, including that it was
not urgent and unforeseen. The High Court found the determination had been
validly made.[3]
Another basis of the challenge was that the Determination
did not sufficiently describe the purposes for which the moneys were to be
expended, and was therefore invalid as an appropriation in blank. In rejecting
that argument, the High Court held that ‘the degree of specificity of the
purpose of an appropriation is for Parliament to determine.’[4]
Further, and critically, the High Court said that the appropriation was not effected
by the Finance Minister making a Determination—the appropriation was effected
by section 12 of the Act. The Minister’s Determination was merely a decision to
allocate already appropriated money to a particular purpose.
Criticism by the Senate Standing
Committee for the Scrutiny of Bills
Following the High Court’s decision in Wilkie v
Commonwealth, the Senate Standing Committee for the Scrutiny of Bills raised
a concern about the availability of the Advance to the Finance Minister. In
particular the Committee said:
1.23 The committee notes that the AFM provision in this bill
allows the Finance Minister to allocate additional funds to entities up to a
total of $295 million via non-disallowable delegated legislation and that it
therefore delegates significant legislative power to the Executive. One of the
core functions of the Parliament is to authorise and scrutinise proposed
appropriations. High Court jurisprudence has emphasised the central role of the
Parliament in this regard. In particular, while the High Court has held that an
appropriation must always be for a purpose identified by the Parliament, '[i]t
is for the Parliament to identify the degree of specificity with which the
purpose of an appropriation is identified'.[5]
The Committee went on to emphasise:
1.25 As AFM determinations are not subject to disallowance,
the primary accountability mechanism in relation to AFMs (beyond the initial
passage of the authorising provision in the regular appropriation bills) is an
annual report tabled in Parliament on the use of the AFM. These reports are
considered in committee of the whole on a motion that the statements of
expenditure be approved. In addition, the reports are published on the
Department of Finance website. The committee draws these reports to the
attention of Senators.
1.26 The committee otherwise draws its scrutiny concerns to
the attention of senators and leaves to the Senate as a whole the
appropriateness of allowing the Finance Minister to determine the allocation of
significant additional funds to entities in a legislative instrument not
subject to disallowance.[6]
Attachment A: Extract from Appropriation
Act (No. 1) 2018–2019
Part 3—Advance
to the Finance Minister
10
Advance to the Finance Minister
(1) This section applies 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:
(a) because of an erroneous
omission or understatement; or
(b) because the 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.
(2) This Act has effect as if Schedule 1 were
amended, in accordance with a determination of the Finance Minister, to make
provision for so much (if any) of the expenditure as the Finance Minister
determines.
(3) The total of the amounts determined under subsection (2)
cannot be more than $295 million.
(4) A determination made under subsection (2) is
a legislative instrument, but neither section 42 (disallowance) nor
Part 4 of Chapter 3 (sunsetting) of the Legislation Act
2003 applies to the determination.
Table 1: list of Advances to the Finance Minister issued
since 2010–11
| Year |
Portfolio |
Appropriation
Act |
Advances
provided ($) |
Determination
(Federal Register of Legislation) |
| |
|
| 2018–19 |
Department of Infrastructure, Regional Development
and Cities |
Appropriation Act (No. 2) 2018–2019 |
75 379 000.00 |
Advance to the
Finance Minister Determination (No. 1 of 2018-2019) |
| 2017–18 |
Australian Bureau of Statistics |
Appropriation Act (No. 1) 2017–2018 |
122 000 000.00 |
Advance to the
Finance Minister Determination (No. 1 of 2017‑2018) |
| 2016–17 |
There were no Advances to the Finance Minister
issued in the 2016–2017 financial year. |
| 2015–16 |
Australian Electoral Commission |
Appropriation Act (No. 1) 2015–2016 |
101 237 000.00 |
Advance to the
Finance Minister Determination (No. 1 of 2015‑16) |
| 2014–15 |
There were no Advances to the Finance Minister
issued in the 2014–2015 financial year. |
| 2013–14 |
There were no Advances to the Finance Minister
issued in the 2013–2014 financial year. |
| 2012–13 |
Education, Employment and Workplace Relations |
Appropriation Act (No. 1) 2012–2013 |
24 117 394.97 |
Advance to the
Finance Minister Determination (No. 1 of 2012-2013) |
| |
Health and Ageing |
Appropriation Act (No. 1) 2012–2013 |
107 000 000.00 |
Advance to the
Finance Minister Determination (No. 2 of 2012-2013) |
| |
Families, Housing, Community Services and Indigenous
Affairs |
Appropriation Act (No. 1) 2012–2013 |
91 017 000.00 |
Advance to the
Finance Minister Determination (No. 3 of 2012-2013) |
| |
Health and Ageing |
Appropriation Act (No. 1) 2012–2013 |
12 500 000.00 |
Advance to the
Finance Minister Determination (No. 4 of 2012-2013) |
| |
Health and Ageing |
Appropriation Act (No. 1) 2012–2013 |
2 200 000.00 |
Advance to the
Finance Minister Determination (No. 4 of 2012-2013) |
| |
Regional Australia, Local Government, Arts and Sport |
Appropriation Act (No. 1) 2012–2013 |
4 632 500.00 |
Advance to the
Finance Minister Determination (No. 5 of 2012-2013) |
| 2011–12 |
Education, Employment and Workplace Relations |
Appropriation Act (No. 1) 2011–2012 |
33 242
205.00 |
Advance to the Finance
Minister Determination (No. 2 of 2011-2012) |
| |
Education, Employment and Workplace Relations |
Appropriation Act (No. 1) 2011–2012 |
14 327
392.10 |
Advance to the
Finance Minister Determination (No. 3 of 2011-2012) |
| |
Families, Housing, Community Services and Indigenous
Affairs |
Appropriation Act (No. 1) 2011–2012 |
5 561
983.00 |
Advance to the
Finance Minister Determination (No. 4 of 2011-2012) |
| |
Families, Housing, Community Services and Indigenous
Affairs |
Appropriation Act (No. 1) 2011–2012 |
17 610
000.00 |
Advance to the
Finance Minister Determination (No. 5 of 2011-2012) |
| |
Regional Australia, Local Government, Arts and Sport |
Appropriation Act (No. 1) 2011–2012 |
6 000
000.00 |
Advance to the
Finance Minister Determination (No. 6 of 2011-2012) |
| |
Regional Australia, Local Government, Arts and Sport |
Appropriation Act (No.1) 2011–2012 |
6 200
000.00 |
Advance to the
Finance Minister Determination (No. 7 of 2011-2012) |
| |
Regional Australia, Regional Development and Local
Government |
Appropriation Act (No.2) 2011–2012 |
41 881
000.00 |
Advance to the
Finance Minister Determination (No. 1 of 2011-2012) |
| 2010–11 |
Prime Minister and Cabinet |
Appropriation Act (No.1) 2010–2011 |
30 701
000.00 |
Advance to the
Finance Minister Determination (No. 1 of 2010-2011) |
| |
Families, Housing, Community Services and Indigenous
Affairs |
Appropriation Act (No.1) 2010–2011 |
14 159
000.00 |
Advance to the
Finance Minister Determination (No. 2 of 2010-2011) |
| |
Australian Electoral Commission |
Appropriation Act (No.1) 2010–2011 |
5 100
000.00 |
Advance to the
Finance Minister Determination (No. 3 of 2010-2011) |
| |
Prime Minister and Cabinet |
Appropriation Act (No.1) 2010–2011 |
7 500
000.00 |
Advance to the
Finance Minister Determination (No. 4 of 2010-2011) |
| |
Prime Minister and Cabinet |
Appropriation Act (No.1) 2010–2011 |
3 130
000.00 |
Advance to the
Finance Minister Determination (No. 5 of 2010-2011) |
[1] Appropriation Act
1901–02 (Cth), Schedule 2, Part 1, Division 25A.
[2].
A history of the inclusion within Appropriation Acts (No. 1)
of Advances to the Finance Minister (and, before then, of Advances to the
Treasurer) is set out by the High Court in its judgment in Wilkie v
Commonwealth (2017) 349 ALR 1, [2017] HCA 40, from paragraph
72.
[3].
Wilkie v Commonwealth (2017)
349 ALR 1, [2017] HCA 40, at [151].
[4].
Ibid., at [91].
[5].
Senate Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 6, 2018, The Senate, 20 June 2018, pp. 7–8.
[6].
Ibid.
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