Explanatory Statement
Financial Management and Accountability Act 1997, Section 32 - Adjustment 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 2 July 2007 and numbered 2 of 2007-2008.
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 effective from 1 July 2007 made under section 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 effective from 1 July 2007 made under section 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 Acting Division Manager, Financial Reporting and Cash Management. This instrument commences on date of registration, effective on 2 July 2007.
Purpose of the instrument
The instrument directs that departmental appropriation in the amount of $84,400,000 provided to the Department of Employment and Workplace Relations (DEWR) in Appropriation Act (No.1) 2007-2008 be transferred to the Workplace Authority (WPA). The instrument also directs that departmental appropriation in the amount of $1,050,000 provided to DEWR in Appropriation Act (No. 1) 2006-2007 be transferred to WPA. The instrument also directs that departmental equity injections appropriation in the amount of $350,000 provided to DEWR in Appropriation Act (No. 2) 2007-2008 be transferred to WPA.
Background
On 28 May 2007, a decision was made to transfer the Office of the Employment Advocate function from the Department of Employment and Workplace Relations to the Workplace Authority. The Workplace Authority was established on 1 July 2007, following the passing of the Workplace Relations Amendment (A Stronger Safety Net) Act 2007.
Notes on the instrument
The instrument provides that the amounts set out in column 4 of the table for the appropriation items in column 1 for DEWR be transferred to WPA.
In accordance with the Legislative Instruments Act 2003, DEWR and WPA were consulted in the preparation of this instrument.
Overview
The Financial Management and Accountability Act 1997 was enacted to address issues related to the management and accountability of financial resources within Australian government agencies. It was introduced by the Commonwealth Parliament to ensure that funds are properly managed and allocated according to the appropriations set by Parliament. The Act aims to maintain financial integrity and transparency within government operations. Section 32 of the Act, which pertains to the adjustment of appropriations when an agency's functions change, was implemented to provide a mechanism for transferring funds between agencies in a structured and controlled manner. The policy objective of this section is to facilitate the smooth transition of financial responsibilities when agencies undergo restructuring or when their functions are reassigned to other entities, ensuring that no financial gaps or redundancies occur in the process.
Scope and Application
The Financial Management and Accountability Act 1997 applies to various agencies within the Commonwealth of Australia, specifically those undergoing a change in functions, either due to the abolition of an existing agency or for other reasons. Under this Act, the Finance Minister has the authority to issue directions for the transfer of appropriations from one agency to another. This power has been delegated to the Chief Executive of the Department of Finance and Administration, who has further delegated it to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. These provisions ensure a seamless transition of financial responsibilities between agencies. The instrument in question directs the transfer of specific appropriations from the Department of Employment and Workplace Relations to the Workplace Authority, effective from 1 July 2007. This adjustment is made in response to the transfer of the Office of the Employment Advocate function from DEWR to the Workplace Authority. The instrument was prepared in consultation with the relevant agencies, in accordance with the Legislative Instruments Act 2003.
Key Provisions
Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) primarily addresses the adjustment of appropriations when there is a change in the functions of an Agency. This section is activated when a function of an existing Agency (the old Agency) is reassigned to another Agency (the new Agency), whether due to the abolition of the old Agency or for other reasons. Specifically, subsection 32(2)(a) allows the Finance Minister to issue directions for the transfer of funds appropriated for the performance of the reassigned function from the old Agency to the new Agency. The instrument, effective from 2 July 2007, authorises the delegation of this power from the Finance Minister to the Chief Executive of the Department of Finance and Administration, and further delegates it to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. The Acting Division Manager, Financial Reporting and Cash Management, issues the actual direction.
The obligations imposed by this instrument require the transfer of specified appropriations from the Department of Employment and Workplace Relations (DEWR) to the Workplace Authority (WPA). This includes departmental appropriations amounting to $84,400,000 from the Appropriation Act (No.1) 2007-2008, $1,050,000 from the Appropriation Act (No. 1) 2006-2007, and departmental equity injections appropriation of $350,000 from the Appropriation Act (No. 2) 2007-2008. These transfers are necessary due to the reassignment of the Office of the Employment Advocate function from DEWR to WPA, a decision formalised on 28 May 2007. As per the instrument, the specified amounts are to be moved to WPA, with both DEWR and WPA being consulted during the preparation of this instrument as required by the Legislative Instruments Act 2003.
The instrument does not explicitly detail any offences, penalties, or consequences for non-compliance. However, given its regulatory nature and the context of financial management, any failure to comply with the direction could potentially lead to administrative or legal repercussions. While the specific penalties are not stated in the explanatory statement, breaches of similar provisions under the FMA Act could result in civil or criminal penalties, depending on the nature and severity of the breach. The Act, in general, provides for enforcement actions that could include fines or other legal sanctions, reflecting the importance of adhering to financial directives within the government.