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 11 March 2005 and numbered 32 of 2004-2005.
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.
Purpose of the instrument
The instrument directs that departmental outputs appropriation of $1,051,000, provided to the Department of Employment and Workplace Relations in Appropriation Act (No. 1) 2004-05, be transferred to the Department of Human Services.
Background
On 26 October 2004, the Governor-General issued an Administrative Arrangements Order which was gazetted in Special Notices Gazette S427 of 27 October 2004, making the Department of Human Services responsible for the development, delivery and coordination of government services, and for monitoring and management of service delivery and purchaser/provider relationships involving Centrelink, the Health Insurance Commission, the Child Support Agency, the Australian Hearing, Health Services Australia and CRS Australia. This arrangement was mirrored in the subsequent Administrative Arrangements Order issued by the Governor-General on 16 December 2004 and gazetted in Special Notices Gazette S 518 of 17 December 2004.
One of the implications of the above is that responsibility for monitoring and management of service delivery and purchaser/provider relationships for services provided to eligible income support recipients and job seekers, previously undertaken by Department of Employment and Workplace Relations, has been transferred to the Department of Human Services.
An appropriation adjustment, pursuant to section 32 of the FMA Act, is required to ensure that appropriation provided to the Department of Employment and Workplace Relations for performance of the functions is transferred to the Department of Human Services.
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 Department of Human Services item listed in column 1.
Overview
The Financial Management and Accountability Act 1997 (FMA Act) was enacted by the Australian Parliament to provide a framework for financial management and accountability within the public sector. A particular problem the Act was introduced to address is the need to ensure smooth transitions in financial resources when government functions are realigned between agencies. Section 32 of the FMA Act specifically deals with the adjustment of appropriations when there is a change in agency functions, either due to the abolition of an agency or for other reasons. This legislative provision empowers the Finance Minister to issue directions for the transfer of appropriated funds from the agency relinquishing a function to the agency assuming it, thereby maintaining fiscal continuity and ensuring that financial resources align with the current operational responsibilities. The policy objective is to facilitate efficient and effective financial management during structural changes within government agencies.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) provides for the adjustment of appropriations when the functions of an agency are transferred to another agency. Specifically, section 32 of the FMA Act applies when a function of an agency (referred to as the old agency) becomes a function of another agency (referred to as the new agency), either due to the abolition of the old agency or for any other reason. Under this provision, the Finance Minister has the authority to issue directions to transfer some or all of an amount appropriated for the performance of the function from the old agency to the new agency. The Finance Minister has delegated this authority to the Chief Executive of the Department of Finance and Administration, who subsequently delegated it to the General Manager, Financial Management Group. This authority extends to adjusting appropriations to reflect changes in agency functions as mandated by Administrative Arrangements Orders issued by the Governor-General. This legislative framework ensures that financial resources are appropriately aligned with the responsibilities of the relevant agencies.
Key Provisions
Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) allows for adjustments to appropriations when a function of an agency is transferred to another agency. Specifically, subsection 32(2)(a) empowers the Finance Minister to issue directions to transfer appropriated funds from the old agency to the new agency responsible for the function. In this context, the instrument, dated 11 March 2005, directs the transfer of a departmental output appropriation of $1,051,000 from the Department of Employment and Workplace Relations to the Department of Human Services. This adjustment follows the transfer of certain responsibilities, such as monitoring and management of service delivery and purchaser/provider relationships, from the former to the latter department. This transfer was formalised by the Administrative Arrangements Orders issued by the Governor-General on 26 October 2004 and 16 December 2004, which were gazetted in Special Notices Gazette S427 and S518 respectively.
The obligations imposed by this instrument primarily concern the financial management and accountability of the agencies involved. The Department of Employment and Workplace Relations is required to ensure that the specified funds are transferred to the Department of Human Services, reflecting the change in responsibility for certain government services. The Department of Human Services, on the other hand, must be prepared to receive and appropriately account for the transferred funds, ensuring that they are used for the intended purposes. Both agencies must adhere to the provisions of the FMA Act and any other relevant legislation to maintain financial transparency and accountability.
Breaching the requirements set out in this instrument could have significant legal consequences. The FMA Act provides for various offences related to the misuse or misappropriation of public funds. Penalties for such breaches can include fines, imprisonment, or both, depending on the severity of the offence. While the instrument itself does not specify maximum penalties, the FMA Act generally allows for substantial fines and imprisonment terms for serious financial misconduct. Therefore, both agencies must ensure strict compliance with the terms of the instrument to avoid any potential legal repercussions.