Explanatory Statement
Financial Management and Accountability Act 1997, Section 32 - Adjustments of Appropriations on Change of Agency Functions
The instrument to which this explanatory statement relates
This explanatory statement relates to an instrument (the instrument) entitled “Direction under Section 32, Financial Management and Accountability Act 1997”, dated 15 February 2006 and numbered 13 of 2005-2006.
The legislative authority under which the instrument is made
Section 32 of the Financial Management and Accountability Act 1997 (the FMA Act) applies if a function of an Agency (the old Agency) becomes a function of another Agency (the new Agency), either because the old Agency is abolished or for any other reason.
Subsection 32(2)(a) of the FMA Act enables the Finance Minister to, amongst other things, issue one or more directions to transfer from the old Agency to the new Agency some or all of an amount that has been appropriated for the performance of that function by the old Agency.
As noted in the FMA Act, the Finance Minister has delegated his power under section 32 to the Chief Executive of the Department of Finance and Administration. By way of an instrument dated 30 November 2004, the Chief Executive of the Department of Finance and Administration has, in turn, delegated the power to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division.
Purpose of the instrument
The instrument directs that departmental outputs Outcome 2 from Appropriation Act (No. 1)
2005-06 totalling $9,724,782, provided to the Department of Employment and Workplace Relations, be transferred to departmental outputs Outcome 1 in Appropriation Act (No.1) 2005-06 for the Office of the Australian Building and Construction Commissioner (ABCC).
Background
As part of its response to the Cole Royal Commission into the Building and Construction Industry, Cabinet agreed to establish the Office of the Australian Building and Construction Commissioner (JH/03/0145/CAB refers). The ABCC’s functions include monitoring and promoting compliance with the Building and Construction Industry Improvement Act 2005, the Workplace Relations Act 1996 and the Building Code.
An appropriation adjustment, pursuant to section 32 of the FMA Act, is required to ensure that appropriation provided to the Department of Employment and Workplace Relations for these functions is transferred to the Office of the Australian Building and Construction Commissioner.
The amount to be transferred has been agreed between the Chief Financial Officers of the Department of Employment and Workplace Relations and the Office of the Australian Building and Construction Commissioner in line with established processes.
Notes on the instrument
The instrument provides that the moneys listed in column 4 of the schedule for the Department of Employment and Workplace Relations item be transferred to the Office of the Australian Building and Construction Commissioner item listed in column 1.
Overview
The Financial Management and Accountability Act 1997, enacted by the Australian Parliament, aims to ensure effective financial management and accountability within government agencies. One specific provision, Section 32, addresses the adjustments of appropriations when there is a change in agency functions, whether due to the abolition of an agency or other reasons. The Act empowers the Finance Minister to issue directions to facilitate the transfer of appropriated funds from the old agency to the new agency responsible for the function. In this context, an instrument issued under Section 32 directs the transfer of $9,724,782 from the Department of Employment and Workplace Relations to the Office of the Australian Building and Construction Commissioner, following the establishment of the latter as part of the government’s response to the recommendations of the Cole Royal Commission into the Building and Construction Industry. This transfer ensures the proper allocation of funds for the new agency's functions, which include monitoring and promoting compliance with specific legislation.
Scope and Application
The Financial Management and Accountability Act 1997, specifically section 32, governs the adjustments of appropriations when there is a change in the functions of an agency. This legislation applies to any scenario where an agency, referred to as the 'old Agency', has its functions transferred to another agency, the 'new Agency', either due to the abolition of the old Agency or for any other reason. The Act mandates that the Finance Minister may issue directions to transfer some or all of the appropriated amounts intended for the performance of a function from the old Agency to the new Agency. The Act’s jurisdiction extends across the Commonwealth of Australia, ensuring a uniform approach to financial management and accountability in governmental functions. However, the Act does not specify exclusions or thresholds but relies on the Finance Minister's discretion, delegated to specific officials within the Department of Finance and Administration, to determine the applicability and extent of any transfer. This delegation framework allows for flexibility in the application of the Act through subordinate instruments, ensuring that financial adjustments are made efficiently in response to changes in agency functions.
Key Provisions
The main operative sections of this instrument, pursuant to Section 32 of the Financial Management and Accountability Act 1997 (FMA Act), allow for the transfer of appropriations from one government agency to another when there is a change in the functions of the agencies involved. Specifically, Subsection 32(2)(a) of the FMA Act empowers the Finance Minister to issue directions to facilitate such transfers. In this instance, the instrument directs the transfer of a specific appropriation from the Department of Employment and Workplace Relations to the Office of the Australian Building and Construction Commissioner (ABCC).
The obligations and requirements imposed by this Act on the relevant parties include the necessity for a formal agreement on the amount to be transferred, as determined by the Chief Financial Officers of the respective departments. The instrument also mandates the adherence to established processes in deciding the amount of the appropriation to be transferred, ensuring that the transition of functions and corresponding financial responsibilities is handled in a systematic and transparent manner.
The instrument further delineates the specific appropriations to be transferred, with a total amount of $9,724,782 from departmental outputs Outcome 2 in the Appropriation Act (No. 1) 2005-06 to departmental outputs Outcome 1 for the ABCC. This directive is the result of Cabinet’s decision to establish the ABCC as part of the response to the Cole Royal Commission into the Building and Construction Industry, necessitating a reallocation of funds to support the ABCC’s functions.
Any breach of the provisions outlined in this instrument could potentially result in legal consequences. While the specific penalties for non-compliance are not detailed in the explanatory statement, breaches of the FMA Act generally could lead to civil or criminal penalties. Civil penalties may include fines and the requirement to repay any misused funds, while criminal penalties could include imprisonment, reflecting the seriousness with which the law treats improper financial management within government agencies. The maximum penalties would depend on the nature and severity of the breach, as well as any applicable provisions within the FMA Act or other relevant legislation.