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 14 April 2005 and numbered 34 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 Division Manager, Financial Reporting and Cash Management Division.
Purpose of the instrument
The instrument directs that departmental outputs appropriation of $2,313,883, provided to the Department of Immigration and Multicultural and Indigenous Affairs in Appropriation Act (No. 1) 2004-2005, be transferred to: the Department of Employment and Workplace Relations ($104,162); the Australian Public Service Commission ($599,000); the Department of Communications, Information Technology and the Arts ($114,332); the Department of Prime Minister and Cabinet ($695,000); and the Department of Health and Ageing ($801,389).
Background
On 18 December 2003, the Governor-General issued an Administrative Arrangements Order which was gazetted in Special Notices Gazette S230 of 25 June 2004, transferring certain Indigenous affairs functions from the Department of Immigration and Multicultural and Indigenous Affairs namely: the Business Development programme and Community Development and Employment Programme to the Department of Employment and Workplace Relations; the Broadcasting programme, the Art, Culture and Language programme and the Sport and Recreation programme to the Department of Communications, Information Technology and the Arts; and the Effective Family Tracing and Reunion Services programme to the Department of Health and Ageing.
In his letter of 28 March 2005 to the Minister for Immigration and Multicultural and Indigenous Affairs, the Prime Minister agreed to the following additional transfer of Indigenous affairs functions from the Department of Immigration and Multicultural and Indigenous Affairs. Responsibility for the function of Indigenous Affairs Secretaries’ Group, the provision of secretariat support for the Secretaries’ Group, and support for the Chair of the Secretaries’ Group, together with responsibility for playing a centralised coordination role on Indigenous matters was transferred to the Department of Prime Minister and Cabinet. Responsibility for developing and promoting Indigenous recruitment and retention strategies throughout the Australian Public Service was transferred to the Australian Public Service Commission.
Appropriation adjustments, pursuant to section 32 of the FMA Act, are required to ensure that appropriation provided to the Department of Immigration and Multicultural and Indigenous Affairs for performance of the functions is transferred to: the Department of Employment and Workplace Relations; the Department of Communications, Information Technology and the Arts; the Department of Health and Ageing; the Department of Prime Minister and Cabinet; and the Australian Public Service Commission.
Notes on the instrument
The instrument provides that the moneys listed in column 4 of the schedule for the Department of Immigration and Multicultural and Indigenous Affairs be transferred to: the Department of Employment and Workplace Relations; the Australian Public Service Commission; the Department of Communications, Information Technology and the Arts; the Department of Prime Minister and Cabinet; and the Department of Health and Ageing in column 3.
Overview
The Financial Management and Accountability Act 1997 was enacted to ensure effective financial management and accountability in the public sector, addressing the need for clear guidelines on the appropriation of funds when there are changes in agency functions. The Act was introduced by the Parliament of Australia, aiming to facilitate orderly financial transfers and ensure that funds are appropriately allocated when responsibilities are shifted between agencies. The instrument issued under Section 32 of the Act, dated 14 April 2005, provides specific direction for the adjustment of appropriations following the transfer of certain Indigenous affairs functions from the Department of Immigration and Multicultural and Indigenous Affairs to other departments, such as the Department of Employment and Workplace Relations, the Australian Public Service Commission, the Department of Communications, Information Technology and the Arts, the Department of Prime Minister and Cabinet, and the Department of Health and Ageing. This ensures that the funds previously allocated for these functions are correctly reassigned to the new responsible departments.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) applies to any situation where there is a change in the functions of an agency, either through the abolition of an agency or for any other reason. Specifically, section 32 of the FMA Act addresses the transfer of appropriations when an agency's functions are re-assigned to another agency. This legislative framework is designed to ensure fiscal responsibility and accountability when governmental responsibilities are restructured. The Act allows the Finance Minister to issue directions for the reallocation of funds from the old agency to the new agency handling the transferred functions. In this context, the instrument dated 14 April 2005, made under section 32 of the FMA Act, details the transfer of specific appropriations from the Department of Immigration and Multicultural and Indigenous Affairs to other designated departments and agencies, such as the Department of Employment and Workplace Relations, the Australian Public Service Commission, the Department of Communications, Information Technology and the Arts, the Department of Prime Minister and Cabinet, and the Department of Health and Ageing. This transfer follows the reallocation of certain Indigenous affairs functions, as per the Administrative Arrangements Order issued on 18 December 2003.
Key Provisions
The Financial Management and Accountability Act 1997 (FMA Act), particularly Section 32, addresses the transfer of appropriations when the functions of an agency are re-allocated to another agency. Under Section 32(2)(a), the Finance Minister has the authority to issue directions to facilitate the transfer of funds that were originally appropriated for the performance of a function by an agency that is being abolished or undergoing a change in function. This authority has been delegated by the Chief Executive of the Department of Finance and Administration to the Division Manager of the Financial Reporting and Cash Management Division. The instrument dated 30 November 2004 formalises this delegation and provides specific instructions regarding the transfer of funds.
The obligations imposed by the FMA Act require that when there is a change in agency functions, the appropriations related to those functions must be appropriately adjusted and reallocated. In this instance, the instrument directs the transfer of $2,313,883 from the Department of Immigration and Multicultural and Indigenous Affairs to various other departments, including the Department of Employment and Workplace Relations, the Australian Public Service Commission, the Department of Communications, Information Technology and the Arts, the Department of Prime Minister and Cabinet, and the Department of Health and Ageing. This reallocation follows the transfer of specific Indigenous affairs functions as per the Administrative Arrangements Order issued on 18 December 2003 and subsequent agreements.
Failure to comply with the directions issued under Section 32 of the FMA Act could result in legal and financial repercussions. While the explanatory statement does not detail specific penalties, breaches of such legislative provisions can typically result in civil or criminal consequences, depending on the nature and severity of the non-compliance. Penalties could include fines or other legal actions as prescribed by relevant laws. It is important for the entities involved to adhere strictly to the directions to avoid any legal ramifications.