Updated
9 October 2020
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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 AFM attracted attention in 2017 when its use to
conduct the same-sex marriage postal ballot by the Australian Bureau of
Statistics was the subject of a High Court challenge. More recently, the
Advance to the Finance Minister has been used to provide increased capacity for
unforeseen additional COVID-19 expenditures.
Historical background
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) 2019–2020, Appropriation (Coronavirus
Economic Response Package) Act (No. 1) 2019–2020 and the Supply Act (No. 1)
2020–2021 (No. 1 Acts) illustrate how the AFM works.
Subsection 10(2) of the No. 1 Acts allow the Finance
Minister to make a Determination under the AFM mechanism. The Determination is a
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 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 any 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 the Appropriation Act
(No. 2) 2019–2020, Appropriation
(Coronavirus Economic Response Package) Act (No. 2) 2019–2020 and the Supply Act (No. 2)
2020–2021 (No. 2 Acts). The difference being that the No. 1 Acts deal
with the ‘the ordinary annual services of the Government’ and No. 2 Acts concern
‘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 No. 1 Acts and
subsection 12(3) of the No. 2 Acts.
Advances to the finance Minister
for the 2019-20 financial year
The amounts for appropriation to the AFM in 2019–20 were
initially:
These appropriations to
the AFM in 2019-20 were subsequently increased in March 2020 to account for
unforeseen expenditures in relation to COVID-19:
The appropriations to the AFM were further increased in April
2020:
However, under subsection
10(5) of the Appropriation Act (No. 5) 2019-2020 and subsection 12(5)
the Appropriation Act (No. 6) 2019-2020 any amounts drawn from these
AFMs were to reduce the amounts available under the Supply Act (No. 1)
2020-21 and Supply Act (No. 2) 2020-21 respectively.
Advances issued under the AFM in 2019-20 totalled $1,974
million. This includes $91.5 million issued under Appropriation Act (No. 6)
2019-2020 which have reduced the available balance for appropriations under
the 2020-21 Supply Acts accordingly.
Advances to the Finance Minister
for 2020-21
The amounts for appropriation to the AFM in 2020–21 already
passed are:
As at the date of the 2020-21 Budget, advances issued under
the 2020-21 Supply Acts total $40 million and $91.5 million was allocated
from the advance under Appropriation Act (No.6) 2019-20, with the
balance of the AFM under the Appropriation Act (No. 6) 2019-2020 reduced
accordingly. The total balance available for the AFM under Supply Act
(No.1) 2020-21 and Supply Act (No.2) 2020-21 is $38,253.6
million.
Appropriation Bill (No.1) 2020-21 and Appropriation Bill
(No.2) 2020-21 introduced into the House of Representatives on 6 October 2020,
propose to set the AFM to $10,000 million for the remainder of 2020-21.
A list of Determinations made by Finance Ministers,
including their amount and benefitting portfolio, is provided at Table 1.
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 $122 million be made to the
Australian Bureau of Statistics (ABS) from the Advance to the Finance Minister.
The Explanatory
Statement to the Determination explains that this payment was made so that
the ABS could conduct a voluntary, postal, plebiscite on the subject of
same-sex marriage. The ABS had an existing statutory authority to carry out
that type of work and to spend money to do so under section 9 of the Census and
Statistics Act 1905 (Cth) and section 13 of the Census and Statistics
Regulation 2016 (Cth).
In Wilkie
v Commonwealth the Member for Denison, Andrew Wilkie, and others
challenged this use of the AFM on several grounds. These included that the use
set out in the Finance Ministers’ Determination on that occasion did not
satisfy the criteria set out in subsection 10(1) of the Appropriation Act (No. 1) 2017–2018,including that it was
not urgent and unforeseen. The High Court found the determination had been
validly made.[3]
Another basis of the challenge was that the Determination
did not sufficiently describe the purposes for which the moneys were to be
expended, and was therefore invalid as an appropriation in blank. In rejecting
that argument, the High Court held that ‘the degree of specificity of the
purpose of an appropriation is for Parliament to determine.’[4]
Further, and critically, the High Court said that the appropriation was not effected
by the Finance Minister making a Determination—the appropriation was effected
by section 12 of the Act. The Minister’s Determination was merely a decision to
allocate already appropriated money to a particular purpose.
Table 1: list of Advances to the Finance Minister issued since 2010–11
| Year |
Portfolio |
Appropriation
Act |
Advances
provided ($) |
Determination
(Federal Register of Legislation) |
| 2020–21 |
Department of Health
Department of Health
Australian Trade and Investment Commission
Department of Infrastructure, Transport, Regional
Development and Communications
|
Supply Act (No. 2) 2020–2021
Supply Act (No. 1) 2020–2021
Supply Act (No. 1) 2020–2021
Supply Act (No. 2) 2020–2021
|
384 060
000.00
808 754 000.00
230 080 000.00
250 000 000.00
|
Advance to the Finance Minister Determination
(No. 4 of 2020‑2021)
Advance to the Finance Minister Determination
(No. 3 of 2020‑2021)
Advance to the Finance Minister Determination
(No. 2 of 2020-2021)
Advance to the Finance Minister Determination
(No. 1 of 2020-2021)
|
| 2019–20 |
Department of Industry, Science, Energy and
Resources
Department of Industry, Science, Energy and Resources
Department of Health
|
Appropriation Act (No. 1) 2019–2020
Appropriation Act (No. 6) 2019–2020
Appropriation Act (No. 2) 2019–2020
|
2 500
000.00
91 500 000.00
380 000 000.00
|
Advance to the Finance Minister Determination
(No. 6 of 2019‑2020)
Advance to the Finance Minister Determination (No. 7
of 2019-2020)
Advance to the Finance Minister Determination
(No. 5 of 2019‑2020)
|
| |
Department of Health
Department of Health
|
Appropriation (Coronavirus Economic
Response
Package) Act (No. 2) 2019–2020
Appropriation (Coronavirus Economic
Response
Package) Act (No. 2) 2019–2020
|
400 000
000.00
800 000 000.00
|
Advance to the Finance Minister Determination
(No. 4 of 2019‑2020)
Advance to the Finance Minister Determination
(No. 3 of 2019‑2020) |
| |
Department of Health
Department of Health
|
Appropriation Act (No. 2) 2019–2020
Appropriation Act (No. 2) 2019–2020 |
200 000
000.00
100 000 000.00
|
Advance to the Finance Minister Determination
(No. 2 of 2019‑2020)
Advance to the Finance Minister Determination
(No. 1 of 2019‑2020)
|
| 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) 263 CLR 487, [2017] HCA 40, from paragraph
72.
[3].
Wilkie v Commonwealth, op.
cit., at [151].
[4].
Ibid., at [91].
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