Net Appropriation Agreement for the Department of Defence (30/06/2005) (Cth)

FINANCIAL MANAGEMENT AND ACCOUNTABILITY ACT 1997, Section 31

NET APPROPRIATION AGREEMENT

For the DEPARTMENT OF DEFENCE

This Agreement is made between:

THE MINISTER FOR FINANCE AND ADMINISTRATION

AND

THE MINISTER FOR DEFENCE

1.       INTRODUCTION

1.1.    This net appropriation agreement is made under section 31 of the Financial Management and Accountability Act 1997 (the FMA Act).

1.2.Under this agreement, if the agency receives any amounts covered by the agreement, the appropriation to the agency in the annual appropriation Act will be increased.

Note 1    Section 31 of the FMA Act, together with certain standard provisions of the annual appropriation Acts, allows a departmental item (or in some rare instances, an administered item) to be increased by an amount up to the amount of eligible receipts where the Finance Minister (or his or her delegate) and the responsible Minister have entered into a net appropriation agreement.

Note 2     This agreement is given effect by specific provisions within the annual appropriation Acts. Therefore, the agreement only has effect while the relevant specific provisions exist in the annual appropriation Acts.

1.3.   This agreement will commence on 30 June 2005.

2.       DEFINITIONS

2.1.    In this agreement:

2.1.1. 'the agency' means the Department of Defence.

2.1.2. ‘eligible receipts’ means the receipts set out in clause 5.1 of this agreement.

2.1.3. ‘minor assets’ are items which have a value of less than $10,000.

2.1.4. ‘grouped assets’ are items of homogenous nature within a single asset class.

3.       PURPOSE

3.1.This net appropriation agreement records the extent to which the amount specified in an item in an annual appropriation Act may be taken to be increased by reference to eligible receipts of the agency.

4.       DURATION OF THE AGREEMENT

4.1.    This agreement replaces any previous net appropriation agreement between the Finance Minister and the responsible Minister in respect of any of the appropriation items identified in this agreement.

4.2.    This agreement continues until a new net appropriation agreement covering the appropriation item identified in this agreement is executed by both parties to the agreement.

Note: Under s31 (4) of the FMA Act, the Finance Minister may at any time cancel or vary this agreement, without the consent of the other party.

5.       NATURE OF ELIGIBLE RECEIPTS

5.1.    The following receipts are eligible receipts for the purposes of this agreement:

5.1.1.   Receipts from the sale, leasing, hiring out of, or other dealing with goods.

5.1.2.   Receipts from the sale of motor vehicles.

5.1.3.   Receipts from the provision of staff and other services.

5.1.4.Receipts from the sale, leasing, hiring out of, or other dealing with of minor assets that are departmental in nature, including:

5.1.4.1.furniture and fittings;

5.1.4.2.inventories (including fuel);

5.1.4.3.software and other intangibles; and

5.1.4.4.infrastructure, other plant and equipment other than the sale of land and buildings;

5.1.5.   Receipts from the sale of specialist military equipment (net of sales costs) up to a threshold of $1 million per item (and for Grouped items $5 million), with proceeds above this threshold to be returned to the Consolidated Revenue Fund unless otherwise determined by Government.

5.1.6.   Receipts from the sale of land and buildings subject to government determination.

5.1.7.   Receipts from a person (whether employed, appointed, or performing services for, the Commonwealth) as payment for any associated benefit provided (whether to that person or another person), including for accommodation, food and clothing.

5.1.8.   Receipts from foreign governments and organisations as a result of participation in international activities, including under cost-sharing arrangements with other parties.

5.1.9.   Receipts from the transfer of annual and long service leave entitlements between agencies.

5.1.10.  Insurance recoveries other than Comcover and Comcare.

5.1.11.  Monetary liquidated damages only where Defence has not received supplementation prior to damages being received.

5.1.12.  Court awarded costs to the extent to which they reflect legal and other costs incurred in litigating the matter where Defence has not received supplementation prior to damages being received.

5.1.13.  Recovery of costs reasonably incurred by any arm of the Australian Defence Force that provides assistance in respect of pursuit and apprehension of foreign boats suspected of illegal fishing.

5.1.14.  Amounts received from the Australian Taxation Office as interest on a late repayment and diesel fuel rebate.

5.1.15.  Sponsorships, grants, subsidies and contributions received to fund departmental activities.

5.1.16.  Donations received, expressed to be for the performance of specific departmental activities.

5.1.17.  Subsidy or grant moneys received as a result of participation in employment subsidy scheme or programs.

5.1.18.  Financial Incentives to enter into leasing arrangements.

5.1.19.  Receipts from a person or organisation for goods or services provided under Defence Assistance to the Civil Community or Defence Force Aid to the Civilian Authorities.

5.1.   For the avoidance of doubt, receipts under item 5.1 do not include:

5.2.1.   Court awarded fines (other than to the extent covered by paragraph 5.1.12); and

5.2.2.   Receipts from taxes, levies or specific cost recovered activities where the receipts are raised under legislation and where the activities are budget funded.

6.       INCREASE IN APPROPRIATION ITEMS

6.1.Subject to the net appropriation provisions of the annual appropriation Acts, the Departmental item for the agency is taken to be increased by the following amounts:

6.1.1.For receipts listed in 5.1.6 (sale of land and buildings), the amount or percentage of the receipts is subject to a determination made by government as part of the Defence Property Disposal Program.

6.1.2.All other receipts listed in 5.1, 100% of the receipts.

Notes

1. In order to comply with the appropriation requirements of sections 81 and 83 of the Constitution and with sections 19 and 48 of the FMA Act, agencies must keep proper accounts and records of all appropriations to ensure that they do not spend above their appropriation limits.
2. The agency must be able to identify, quantify and, if requested, produce information to show the amounts attributable to net appropriation receipts. This information should be available within the agency’s Financial Management Information System or in other supporting systems or documentation.
3. The agency must report the net appropriations referred to above, as required, in the relevant Budget documents, agency financial statements and the Consolidated Financial Statements.
4. It is the agency’s responsibility to be aware of any changes to reporting requirements which affect net appropriation reporting requirements.
5. The Efficiency Dividend will not apply to any amounts deemed to be appropriated under this agreement.

...............................................................             ........................................................

Delegate of the Minister for Finance    For and on Behalf of the Minister for

and Administration    Defence       

Peter Saunders   Name Ken Moore

Division Manager       Acting Chief Finance Officer

Government and Defence Division

Budget Group

...............................................................             ........................................................ Dated 29 June 2005  Dated 30 June 2005