9
May 2018
PDF version [296KB]
Dinty
Mather and Jonathan Chowns
Economics Section
An established feature of the
Appropriation Bills is the Advance to the Finance Minister (AFM). The AFM
recently attracted attention 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.
This brief explains the concept, how it has been used and
summarises the High Court’s judgment in which it found that the AFM was validly
used in that case.
Some basic Budget principles—The
Consolidated Revenue Fund and appropriations
The Consolidated Revenue Fund (CRF) is established by
section 81 of the Australian
Constitution. All moneys received by
the Commonwealth must be paid into it. Section 83 of the Constitution
requires that the Commonwealth may withdraw any monies from the CRF only if an
Act of the Parliament authorises an appropriation and specifies its purpose.
Such appropriations are found in the Appropriation Acts, the
first of which for the 2018-19 financial year was tabled by the Treasurer on 8
May 2018, and also for certain standing appropriations, like payments for
Medicare, in the legislation creating the Commonwealth’s liability to pay. For
instance, subsection 125(1) of the Health Insurance
Act, which provides the framework for Medicare payments, says:
125 (1) All amounts payable by the Commonwealth under Part II
or under an arrangement in force under section 129A shall be paid out of the
Consolidated Revenue Fund, which is appropriated accordingly.(emphasis
added)
Mechanisms to deal with uncertainty—the
Advance to the Finance Minister
Forecasts of future expenditure needs are sometimes
necessarily inexact. They may be based on assumptions that prove to be wrong,
assessments of future economic conditions that do not eventuate or circumstances
that are simply unanticipated.
It is established practice to build into estimates of future
expenditure some flexibility to account for contingencies. Two Budget
mechanisms to achieve flexibility are the Contingency Reserve and the Advance
to the Finance Minister. They serve different purposes to address different
kinds of uncertainty.
The AFM is a long-standing feature of the Appropriation Bills
dating from 1979 when the Advance to the Finance Minister replaced the Advance
to the Treasurer following the establishment in 1976 of the office of the
Finance Minister and, with it, the creation of the Department of Finance.[1]
The AFM is a provision in the Appropriation Bills to release
money without any specified outcome or purpose.
As a recent example, section 10 of the Appropriation
Bill (No. 1) 2018–19 provides that the Finance Minister can issue an
advance to an entity when:
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, [...]:
(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]
In order to make a payment from the AFM under that Act, the Finance
Minister must make a Determination under section 10. The Determination is a legislative
instrument, but disallowance and sun-setting do not apply under section 42
and Part 4 of Chapter 3 of the Legislation Act 2003.[3]
A similar provision is found in Appropriation Bill (No. 2),
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 Advance is established in the first
Appropriation Acts each year and then replenished whenever supplementary
Appropriation Acts are passed.
The proposed amounts for appropriation to the AFM in 2018-19
are:
A list of
determinations made by Finance Ministers, their amount and purpose, features at
the end of this brief.
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.
High Court challenge
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 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 including that it was not urgent and unforeseen. The High
Court found otherwise.[6]
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.’[7]
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.
List
of Advances to the Finance Minister issued since 2010-11
|
Year
|
Portfolio
|
Appropriation Act
|
Advances provided
|
Determination (Federal Register of Legislation)
|
Minister and Purpose of advance
|
|
2017–18
|
Australian Bureau of Statistics
|
Appropriation Act (No.1) 2017–18
|
$ 122,000,000.00
|
Advance to the Finance Minister
Determination (No. 1 of 2017‑2018)
|
Minister Cormann
To undertake the voluntary postal plebiscite for the
Plebiscite (Same-Sex Marriage) Bill 2016.
|
|
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) 2015–16
|
$ 101,237,000.00
|
Advance to the Finance Minister
Determination (No. 1 of 2015‑16)
|
Minister Cormann
To enable AEC to implement the electoral reforms
recently agreed to by Parliament in the Commonwealth Electoral Amendment
Act 2016, as well as to bring forward election preparations for
the 2016 Federal Election
|
|
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) 2012–13
|
$ 24,117,394.97
|
Advance to the Finance Minister
Determination (No. 1 of 2012-2013)
|
Minister Wong
To enable DEEWR to cover payments under the General
Employee Entitlements and Redundancy Scheme (GEERS).
|
|
Health and Ageing
|
Appropriation Act (No.1) 2012–13
|
$ 107,000,000.00
|
Advance to the Finance Minister
Determination (No. 2 of 2012-2013)
|
Minister Wong
To enable Health to make payments through the Local
Hospital Networks Special Account, to Victorian Local Hospital Networks.
|
|
Families, Housing, Community Services and Indigenous
Affairs
|
Appropriation Act (No.1) 2012–13
|
$ 91,017,000.00
|
Advance to the Finance Minister
Determination (No. 3 of 2012-2013)
|
Minister Wong
To enable FaHCSIA to meet payment obligations under
the Family Support Program before 30 June 2013. As part of the
2013-2014 Budget, the Government agreed to bring forward $91.857 million for
services under the Family Support Program.
|
|
Health and Ageing
|
Appropriation Act (No.1) 2012–13
|
$ 12,500,000.00
|
Advance to the Finance Minister
Determination (No. 4 of 2012-2013)
|
Minister Wong
To enable Health to make payments to the Epworth
HealthCare Geelong Hospital and to provide grants to organisations to address
Female Genital Mutilation.
|
|
Health and Ageing
|
Appropriation Act (No.1) 2012–13
|
$ 2,200,000.00
|
Advance to the Finance Minister
Determination (No. 4 of 2012-2013)
|
Minister Wong
To enable payments to be made to the Australian Red
Cross Society.
|
|
Regional Australia, Local Government, Arts and Sport
|
Appropriation Act (No.1) 2012–13
|
$ 4,632,500.00
|
Advance to the Finance Minister
Determination (No. 5 of 2012-2013)
|
Minister Wong
To enable the Department of Regional Australia, Local
Government, Arts and Sport to make payments to service providers to improve
opportunities for community participation in sport and recreation.
|
|
2011–12
|
Education, Employment and Workplace Relations
|
Appropriation Act (No.1) 2011–12
|
$ 33,242,205
|
Advance to the Finance Minister
Determination (No. 2 of 2011-2012)
|
Minister Gray
To enable the
Department of Education, Employment and Workplace Relations to meet an
increased number of General Employee Entitlements and Redundancy Scheme
payments.
|
|
Education, Employment and Workplace Relations
|
Appropriation Act (No.1) 2011–12
|
$ 14,327,392
|
Advance to the Finance Minister Determination
(No. 3 of 2011-2012)
|
To enable
the Department of Education, Employment and Workplace Relations to meet an
increased number of General Employee Entitlements and Redundancy Scheme
payments.
|
|
Families, Housing, Community Services and Indigenous
Affairs
|
Appropriation Act (No.1) 2011–12
|
$ 5,561,983
|
Advance to the Finance Minister
Determination (No. 4 of 2011-2012)
|
Minister Wong
To enable
the Department of Education, Employment and Workplace Relations to meet an
increased number of General Employee Entitlements and Redundancy Scheme
payments.
|
|
Families, Housing, Community Services and Indigenous
Affairs
|
Appropriation Act (No.1) 2011–12
|
$ 17,610,000
|
Advance to the Finance Minister
Determination (No. 5 of 2011-2012)
|
Minister Wong
To enable
the Department
of Families, Housing, Community Services and Indigenous Affairs to meet
commitments for No Interest Loan Scheme subsidies under the Home
Energy Saver Scheme.
|
|
Regional Australia, Local Government, Arts and Sport
|
Appropriation Act (No.1) 2011–12
|
$ 6,000,000
|
Advance to the Finance Minister Determination
(No. 6 of 2011-2012)
|
Minister Wong
To enable
the Department
of Regional Australia, Local Government, Arts and Sport to meet commitments
under funding agreements with community and cultural bodies in 2011-2012.
|
|
Regional Australia, Local Government, Arts and Sport
|
Appropriation Act (No.1) 2011–12
|
$ 6,200,000
|
Advance to the Finance Minister
Determination (No. 7 of 2011-2012)
|
Minister Wong
To enable the
Department of Regional Australia, Local Government, Arts and Sport to meet
commitments under funding agreements with sports and recreation bodies in
2011-2012.
|
|
Prime Minister and Cabinet
|
Appropriation Act (No.2) 2011–12
|
$ 41,881,000
|
Advance to the Finance Minister
Determination (No. 1 of 2011-2012)
|
Minister Wong
To
enable the Department of Regional Australia, Regional Development and Local
Government to meet legal commitments under funding arrangements that fall due
before the Appropriation passage of the next annual Acts.
|
|
2010–11
|
Prime Minister and Cabinet
|
Appropriation Act (No.1) 2010–11
|
$ 30,701,000
|
Advance to the Finance Minister
Determination (No. 1 of 2010-2011)
|
Minister Wong
To enable the
Department of the Prime Minister and Cabinet to meet a shortfall of funding
for expenditure relating to the transfer of responsibility for cultural
affairs, including movable cultural heritage, and support for the arts.
|
|
Families, Housing, Community Services and Indigenous
Affairs
|
Appropriation Act (No.1) 2010–11
|
$ 14,159,000
|
Advance to the Finance Minister
Determination (No. 2 of 2010-2011)
|
Minister Wong
To enable the
Department of Families, Housing, Community Services and Indigenous Affairs to
meet increased expenditure of the Helping Children with Autism Early
Intervention program.
|
|
Finance and Deregulation
|
Appropriation Act (No.1) 2010–11
|
$ 5,100,000
|
Advance to the Finance Minister
Determination (No. 3 of 2010-2011)
|
Minister Wong
To enable the
Australian Electoral Commission to ensure ongoing employee and supplier
commitments can be paid as they fall due.
|
|
Prime Minister and Cabinet
|
Appropriation Act (No.1) 2010–11
|
$ 7,500,000
|
Advance to the Finance Minister
Determination (No. 4 of 2010-2011)
|
To enable
the Department of Prime Minister and Cabinet to cover payments for the
2011-12 budget measure ‘Supporting football in the lead up to the 2015 Asian
Cup’. This measure has expenditure implications in the 2010-11 financial
year that were unforeseen at the time of the 2010-11 Appropriation Bills (No.
1) and (No. 3).
|
|
Prime Minister and Cabinet
|
Appropriation Act (No.1) 2010–11
|
$ 3,130,000
|
Advance to the Finance Minister
Determination (No. 5 of 2010-2011)
|
Minister Wong
To enable the
Department of Prime Minister and Cabinet to fund early event planning
activity and contribute to the establishment of the Local Organising
Committee for the 2011-12 budget measure ‘Supporting football in the
lead up to the 2015 Asian Cup’.
|
Source:
Department of Finance, ‘Advances to the Finance Minister
(AFM)’, Department
of Finance website.
[1].
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 from
paragraph 72.
[2]. Appropriation
Bill (No. 1) 2018–2019, section 10; Appropriation Bill (No. 2) 2018–2019,
section 12.
[3]. Legislation Act
2003.
[4]. Appropriation
Bill (No. 1) 2018–2019, clause 10.
[5]. Appropriation
Bill (No. 2) 2018–2019, clause 12.
[6].
Wilkie v Commonwealth (2017) 349 ALR 1, [2017]
HCA 40, at [151].
[7].
Ibid., at [91].
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