Direction under section 32, Financial Management and Accountability Act 1997 – Adjustments of Appropriations on Change of Agency Functions (No. 17 of 2005-2006)

Overview

The Financial Management and Accountability Act 1997 (FMA Act) was enacted by the Commonwealth Parliament to establish a framework for financial management and accountability within Australian Government agencies. One of the significant issues the Act aimed to address is the need for flexibility in financial appropriations when there is a change in agency functions, whether due to the abolition of an agency or a reassignment of duties. The FMA Act provides mechanisms to adjust appropriations accordingly to ensure continuity and effectiveness in public administration. The instrument in question, "Direction under Section 32, Financial Management and Accountability Act 1997," dated 6 April 2006, pertains to the transfer of appropriations from the Department of Employment and Workplace Relations to the Office of the Australian Building and Construction Commissioner (ABCC). This transfer was necessitated by the establishment of the ABCC as part of the government's response to the Cole Royal Commission into the Building and Construction Industry. The policy objective here is to ensure that financial resources are appropriately allocated to support the ABCC's functions, which include monitoring and promoting compliance with various legislative frameworks. The instrument was issued under the delegated authority of the Chief Executive of the Department of Finance and Administration, reflecting the government's structured approach to financial management in response to organisational changes.

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 applies to instances where a function previously performed by one agency (referred to as the old Agency) is transferred to another agency (the new Agency), whether due to the abolition of the old Agency or for other reasons. The Act authorises the Finance Minister to issue directions for the transfer of funds appropriated for the function from the old Agency to the new Agency. This provision ensures a seamless transition of financial resources as agencies undergo structural changes. The Finance Minister has delegated this power to the Chief Executive of the Department of Finance and Administration, who in turn has further delegated it to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. This legislative framework extends across the Commonwealth, ensuring uniform application of appropriation adjustments in line with agency restructuring. The instrument, dated 6 April 2006, directs the transfer of specific appropriations from the Department of Employment and Workplace Relations to the Office of the Australian Building and Construction Commissioner, reflecting the reallocation of resources in response to the establishment of the ABCC as part of the government's initiative following the Cole Royal Commission.

Key Provisions

The Financial Management and Accountability Act 1997 (FMA Act) outlines provisions for the transfer of appropriations when the functions of an agency change. Specifically, section 32(2)(a) allows the Finance Minister to issue directions to transfer appropriations from an old agency to a new agency when a function is transferred due to abolition or other reasons. In this context, the instrument dated 6 April 2006 directs the transfer of $4,130,000 from the Department of Employment and Workplace Relations to the Office of the Australian Building and Construction Commissioner (ABCC), as well as $2,370,000 in non-lapsing appropriations from prior years. This transfer is in response to the establishment of the ABCC as part of the government's response to the Cole Royal Commission into the Building and Construction Industry. The obligations imposed by the Act require that the Finance Minister, through delegation, ensure that appropriations are correctly allocated to reflect the current functions of agencies. This includes the necessity for the Chief Financial Officers of the involved departments to agree on the transfer amounts in line with established processes. The instrument in question thus mandates that the specified funds be transferred to the ABCC to support its functions, including monitoring and promoting compliance with relevant acts. Failure to comply with the directions issued under section 32 of the FMA Act may result in legal consequences. While the specific penalties for non-compliance are not detailed in the explanatory statement, breaches of legislative directions generally attract penalties that could include fines or other legal sanctions. The instrument itself is a formal directive that, if disregarded, could lead to enforcement actions by the relevant authorities, potentially resulting in criminal or civil liability depending on the nature and extent of the breach.