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Legislative Assembly for the ACT: 2004 Week 05 Hansard (Friday, 14 May 2004) . . Page.. 2114 ..

The proposed amendment to the Act is consistent with recommendation 2(a) in the PAC Report, that is, the Treasurer’s Advance should “provide for urgent and unforeseen expenditure, and where there is an error in omission or the understatement of other appropriations”. The proposed amendment is similar to Commonwealth legislation.

However, the effect of this amendment, alone, is likely to result in varying interpretations as to the meaning of the term ‘urgent’, which could possibly cause potential breaches of the FMA. It is proposed that the ambiguity be resolved by providing in the Financial Management Guidelines that “there is an urgent need for expenditure if the expenditure is needed because available funding for the financial year in which the expenditure is to be authorised will be, or is close to being, exhausted.

The proposed definition of ‘urgent need for expenditure’ is similar to the Commonwealth’s definition of ‘urgency’ and is consistent with the recommendation 2(b) in the PAC Report. However, the Commonwealth’s operational guidelines for the Advance to the Finance Minister defines ‘urgent need for expenditure' as meaning “that Advance to the Finance Minister will be available only if an agency has exhausted, or is close to exhausting, all available funding under the relevant appropriation. "Close to exhaustion" in this context means that an agency expects to exhaust its available appropriation within two weeks.”

It is important to note that the Commonwealth’s definition reflects the cash basis upon which appropriations are managed in the Commonwealth. The definition this Government proposes reflects the ACT’s accrual-based financial management framework.

Mr Speaker, section 18 of the Act currently allows the Treasurer to authorise expenditure against the amount appropriated for Treasurer’s Advance. The Act, however, does not define the term ‘expenditure’.

It is proposed that the term “expenditure”, for the purposes of the Treasurer’s Advance provisions of the Act, will mean making payments, or entering into a contract to make payments for output delivery, or payments on behalf of the Territory, for goods, services (including employee services), grants, subsidies or from capital injections.

Treasurer's Advance can only be used where the Territory makes payments within the financial year, or has a firm commitment in place to make such payments. The intention will be to include any expenditure that is covered by new or existing contracts or other non-cancellable obligations (such as Deeds of Agreement), and to exclude expenditure that does not have such a firm commitment in place.

It should be noted that the requirement of “entering into a contract” relating to payments to a provider, resulting from the provision of goods and/or services does not necessarily require the payment of cash within the same financial year as the authorisation. This is consistent with the well-accepted principles of accrual accounting and recommendation 2(c) in the PAC Report.

Mr Speaker, the proposed amendments to the Act restricts the use of Treasurer’s Advance. The Bill makes it quite clear that payments can only be made where an urgent need exists to make payments, or enter into a contract to make payments for output delivery, or payments on behalf of the Territory, for the acquisition of goods, services, grants or capital projects. It prevents the internal transfer of funds within

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