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 3 July 2006 and numbered of 2 of 2006-2007.
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.
By way of an instrument dated 19 February 2003 made under s.62 of 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 3 April 2006 made under s.53 of the FMA Act, 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. The direction is issued by the Division Manager, Financial Reporting and Cash Management Division.
Purpose of the instrument
The instrument directs that departmental appropriation totalling $19,072,000, provided to the Refugee Review Tribunal in Appropriation Act (No.1) 2006-2007, be transferred to the Migration Review Tribunal and Refugee Review Tribunal (the MRT-RRT).
Background
On 30 June 2006 the Refugee Review Tribunal was abolished. On 1 July 2006, the MRT-RRT became a prescribed agency. The functions which were previously performed by the Refugee Review Tribunal will from 1 July 2006 be performed by the MRT-RRT. An appropriation adjustment, pursuant to section 32 of the FMA Act, is required to ensure that appropriation provided to the Refugee Review Tribunal is transferred to the MRT-RRT.
Notes on the instrument
The instrument provides that the amount set out in column 4 of the table in the instrument for the departmental item in Appropriation Act No.1 2006-2007 be transferred to the MRT-RRT.
Overview
The Financial Management and Accountability Act 1997 was enacted to address the need for effective financial management and accountability mechanisms within Commonwealth agencies. This legislation was introduced by the Parliament of Australia to provide a robust framework for the management of public funds and to ensure that agencies operate within the bounds of their appropriations. One of the key provisions of the Act is Section 32, which deals with the adjustments of appropriations when there is a change in agency functions, whether due to the abolition of an agency or for any other reason. This section enables the Finance Minister to issue directions for the transfer of appropriated funds from an old agency to a new one performing the same or similar functions, ensuring continuity in funding and avoiding lapses. The policy objective behind this provision is to maintain financial integrity and operational efficiency in the transition of agency functions.
Scope and Application
The Financial Management and Accountability Act 1997 applies to the appropriation of funds within Australian Commonwealth agencies, and specifically addresses the transfer of appropriations when there is a change in the functions of an agency. Section 32 of the Act provides for the adjustment of appropriations when a function of an agency is transferred to another agency, either due to the abolition of the original agency or for any other reason. This section allows the Finance Minister to issue directions for the transfer of funds to ensure continuity of service and financial accountability. The instrument in question, "Direction under Section 32, Financial Management and Accountability Act 1997", dated 3 July 2006, specifies the transfer of $19,072,000 from the Refugee Review Tribunal to the Migration Review Tribunal and Refugee Review Tribunal (MRT-RRT), following the abolition of the former on 30 June 2006 and its functions being assumed by the latter. This adjustment is necessary to ensure that the appropriated funds follow the transferred functions, thereby maintaining fiscal responsibility and compliance with the Act. The instrument is issued under the delegated authority of the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division, within the Department of Finance and Administration.
Key Provisions
The main operative sections of the instrument are Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) and the direction issued under that section (subsection 32(2)(a)). Section 32 applies when a function of an Agency is transferred to another Agency, requiring the Finance Minister to issue a direction for the transfer of appropriations related to the function. The direction issued under this section transfers the appropriation of $19,072,000 from the Refugee Review Tribunal to the Migration Review Tribunal and Refugee Review Tribunal (MRT-RRT) as a result of the abolition of the former and the creation of the latter.
The obligations imposed on the parties under this Act include the requirement for the Finance Minister, or their delegate, to issue a direction for the transfer of appropriations when an Agency’s functions are transferred to another Agency. In this instance, the Finance Minister has delegated this power to the Chief Executive of the Department of Finance and Administration, who in turn delegated it to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. The Division Manager issued the direction, transferring the specified appropriation from the Refugee Review Tribunal to the MRT-RRT. The instrument provides detailed instructions on how this transfer is to be carried out, ensuring that the appropriation is correctly re-allocated.
Any failure to comply with the provisions of Section 32 of the FMA Act, or the direction issued under it, could result in legal consequences. While the explanatory statement does not specify particular offences or penalties, breaches of directions made under the FMA Act could potentially lead to civil or criminal liability, depending on the nature and extent of the breach. The maximum penalties for breaches of the FMA Act can include fines and imprisonment, although the specifics would depend on the particular breach and the relevant jurisdictional laws.
The instrument ensures that the appropriation intended for the Refugee Review Tribunal is now available to the MRT-RRT, facilitating a smooth transition of functions and financial responsibility following the abolition of the former Tribunal. This legal framework is designed to maintain financial integrity and accountability within the government’s financial management processes.