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 27 April 2006 and numbered 19 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 from Appropriation Act (No. 1) 2005-06 totalling $3,264,000, provided to the Department of Employment and Workplace Relations, be transferred to Departmental Outputs in Appropriation Act (No.1) 2005-06 for the Australian Fair Pay Commission Secretariat (AFPC).
Background
As part of the Workchoices system, Cabinet agreed to establish the Australian Fair Pay Commission Secretariat (JH05/0186/CAB refers), and agreed to fund the Department of Employment and Workplace Relations for this purpose.
An appropriation adjustment, pursuant to section 32 of the FMA Act, is required to ensure that unspent appropriation provided to the Department of Employment and Workplace Relations for the establishment of the Australian Fair Pay Commission Secretariat, be transferred to the Australian Fair Pay Commission Secretariat.
The amount to be transferred has been agreed between the Chief Financial Officers of the Department of Employment and Workplace Relations and the Australian Fair Pay Commission Secretariat 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 Australian Fair Pay Commission Secretariat item listed in column 1.
Overview
The Financial Management and Accountability Act 1997 was enacted by the Parliament of Australia to provide a comprehensive framework for financial management and accountability within the Australian Government. The Act aims to ensure that public money is managed efficiently, economically, effectively, and ethically. A specific provision, Section 32, addresses the adjustments of appropriations when there is a change in agency functions, either due to the abolition of an agency or for other reasons. This section enables the Finance Minister to issue directions for the transfer of funds from the old agency to the new agency responsible for the function. The policy objective is to maintain fiscal integrity and ensure that appropriations are aligned with the current functions of agencies. The Explanatory Statement for the Direction under Section 32 illustrates this mechanism, detailing a transfer of $3,264,000 from the Department of Employment and Workplace Relations to the Australian Fair Pay Commission Secretariat as part of the Workchoices system. This transfer was agreed upon by the relevant Chief Financial Officers and follows established processes to ensure accountability and transparency in financial management.
Scope and Application
The Financial Management and Accountability Act 1997, specifically Section 32, pertains to the adjustment of appropriations when there is a change in the functions of an agency. This act applies to the situation where a function of an agency, referred to as the old agency, becomes the function of another agency, the new agency, due to the abolition of the old agency or any other reason. Under this section, the Finance Minister has the authority to issue directions to transfer some or all of the amount that has been appropriated for the performance of the function by the old agency to the new agency. The scope of this legislation is thus focused on the financial management and accountability aspects of government agencies when there is a reassignment of functions between them. The geographic and jurisdictional reach of this act is within the Commonwealth of Australia, impacting federal government agencies. The act does not specify any exclusions, exemptions, or thresholds within the explanatory statement, and the application of the act can be extended or restricted through subordinate instruments, as evidenced by the delegation of powers from the Finance Minister to the Chief Executive of the Department of Finance and Administration and further to the General Manager and Division Manager within the Financial Management Group.
Key Provisions
Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) addresses the adjustments to appropriations when there is a change in the functions of an agency. Specifically, subsection 32(2)(a) enables the Finance Minister to issue directions for transferring funds from the old agency to the new agency if a function is transferred. In this case, the instrument dated 27 April 2006 directs that Departmental Outputs from Appropriation Act (No. 1) 2005-06, amounting to $3,264,000, provided to the Department of Employment and Workplace Relations, be transferred to the Australian Fair Pay Commission Secretariat. The purpose of this adjustment is to ensure that unspent appropriations are correctly allocated for the establishment of the Australian Fair Pay Commission Secretariat.
The obligations imposed by this Act and the instrument include the transfer of specified appropriations from one department to another, ensuring that funds are appropriately allocated according to the current functional responsibilities of the agencies involved. The Finance Minister, through delegation, has the authority to direct such transfers, and the Chief Executive of the Department of Finance and Administration has further delegated this power to specific officials within the department. The instrument itself provides detailed instructions on the transfer of funds, specifying the exact amounts and the departments involved.
Failure to comply with the directions issued under this Act could lead to significant financial mismanagement and potential legal consequences. While the Explanatory Statement does not detail specific penalties, breaches of financial management laws in Australia can result in both criminal and civil penalties. Criminal penalties may include fines or imprisonment, while civil penalties could involve financial penalties or other remedies. The severity of these penalties would depend on the nature and extent of the breach, as well as any resulting financial loss to the Commonwealth.