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 30 June 2006 and numbered 22 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.
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 $62,231.04, provided to the Department of Employment and Workplace Relations (DEWR) in Appropriation Act (No.1) 2005-2006, to be transferred to the Office of the Australian Building and Construction Commissioner (ABCC). The instrument also directs that non-lapsing appropriation from prior years totalling $862,453.23 provided to DEWR be transferred to the ABCC.
Background
In April 2003 and as part of its response to the Cole Royal Commission into the Building and Construction Industry, the Australian Government agreed to establish the ABCC. 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.
On 1 October 2005 the ABCC became a prescribed agency. An appropriation adjustment, pursuant to section 32 of the FMA Act, is required to ensure that appropriation provided to the DEWR is transferred to the ABCC.
Notes on the instrument
The instrument provides that the amount set out in column 4 of the table in instrument for the departmental item in Appropriation Act (No.1) 2005-2006 and non-lapsing appropriation from prior years be transferred to the ABCC.
Overview
The Financial Management and Accountability Act 1997 was enacted to provide a framework for the financial management of Commonwealth entities and to ensure accountability for their financial management. The Act was introduced to address the need for a consistent and transparent approach to the financial management of government agencies, ensuring that public funds are used efficiently, effectively and in accordance with the law. The Act was enacted by the Parliament of Australia, with the objective of promoting sound financial management practices and enhancing accountability for the use of public funds. In response to the establishment of the Office of the Australian Building and Construction Commissioner (ABCC) in 2003, the Act was amended to allow for the transfer of appropriations between agencies where there is a change in functions. The instrument dated 30 June 2006 is an example of this amendment in action, directing the transfer of departmental appropriation and non-lapsing appropriation from the Department of Employment and Workplace Relations to the ABCC.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) applies to adjustments of appropriations when the functions of an agency change, either due to abolition or for other reasons. Specifically, Section 32 of the FMA Act authorises the Finance Minister to issue directions to transfer appropriations from an old agency to a new agency responsible for the same functions. This is implemented through instruments and delegations that allow the Chief Executive of the Department of Finance and Administration and subsequently the General Manager of the Financial Management Group and the Division Manager of the Financial Reporting and Cash Management Division to issue such directions. The instrument dated 30 June 2006, for instance, directs the transfer of departmental appropriation and non-lapsing appropriation from the Department of Employment and Workplace Relations to the Office of the Australian Building and Construction Commissioner. This transfer is a result of the establishment of the ABCC in response to the Cole Royal Commission and its subsequent functions related to compliance with industry regulations. The adjustments are made to ensure proper allocation of funds to the appropriate agency.
Key Provisions
The primary operative section of this legislation is Section 32 of the Financial Management and Accountability Act 1997 (FMA Act). This section allows for adjustments to appropriations when there is a change in the functions of an agency. Specifically, if a function of an old agency becomes a function of a new agency, the Finance Minister can issue directions to transfer funds from the old agency to the new agency, as stipulated in Subsection 32(2)(a). The instrument in question directs the transfer of departmental appropriation amounting to $62,231.04 and non-lapsing appropriation totalling $862,453.23 from the Department of Employment and Workplace Relations (DEWR) to the Office of the Australian Building and Construction Commissioner (ABCC).
Under the FMA Act, the obligations imposed on the parties include ensuring that the appropriation transfers are properly executed. The Finance Minister, or a delegate such as the Chief Executive of the Department of Finance and Administration, must issue the necessary directions to facilitate the transfer of funds. Additionally, the new agency, in this case the ABCC, must be prepared to receive and account for the transferred appropriations in accordance with the provisions of the FMA Act.
There are no specific offences, penalties, or consequences mentioned within the explanatory statement or the instrument itself for the breach of these provisions. However, the Financial Management and Accountability Act 1997 provides a framework for financial management and accountability that includes various compliance and reporting requirements. Failure to adhere to these requirements could potentially result in civil or criminal penalties under the broader provisions of the Act, though the specific penalties would depend on the nature and severity of the breach. The instrument ensures that the necessary financial adjustments are made smoothly and transparently, in line with the statutory requirements.