Direction under section 32, Financial Management and Accountability Act 1997 – Adjustments of Appropriations on Change of Agency Functions (No. 4 of 2007-2008)

Overview

The Financial Management and Accountability Act 1997 (FMA Act) was enacted to provide a framework for financial management and accountability within the Australian government. This Act was introduced to address the need for a cohesive and systematic approach to managing public funds, ensuring transparency, and maintaining accountability in the use of government resources. The Act provides mechanisms for the appropriation, management, and audit of public money, including provisions for the adjustment of appropriations when government functions change hands between agencies. The FMA Act was enacted by the Australian Parliament, reflecting the policy objective of establishing robust financial management practices across all government departments and agencies. The Act empowers the Finance Minister to direct adjustments in appropriations, ensuring that financial resources are aligned with current operational needs and responsibilities.

Scope and Application

The Financial Management and Accountability Act 1997, specifically Section 32, pertains to the adjustment of appropriations when there is a change in the functions of an agency. This Act applies to agencies that undergo a change in their functions, either through abolition or other reasons, necessitating a reallocation of appropriated funds. The Act's jurisdictional reach is national, as it applies across the Commonwealth of Australia. The instrument, "Direction under Section 32, Financial Management and Accountability Act 1997", dated 9 August 2007, facilitates the transfer of funds from the old agency to the new agency performing the same functions. The Finance Minister, under section 32(2)(a), has the authority to issue directions for such transfers, which has been delegated to the Chief Executive of the Department of Finance and Administration, and subsequently to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. This delegation allows for the practical implementation of fund transfers, as illustrated by the direction to transfer $1,219,315 from the Department of Employment and Workplace Relations to the Office of the Workplace Ombudsman. The instrument is effective from 1 July 2007, aligning with the establishment of the Office of the Workplace Ombudsman on the same date, following the enactment of the Workplace Relations Amendment (A Stronger Safety Net) Act 2007.

Key Provisions

Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) provides mechanisms for the adjustment of appropriations when a function of one agency is transferred to another agency. Specifically, subsection 32(2)(a) of the FMA Act allows the Finance Minister to issue a direction to transfer an amount appropriated for a function from the old agency to the new agency. This direction is operationalised by an instrument, which in this case, directs the transfer of $1,219,315 from the Department of Employment and Workplace Relations (DEWR) to the Office of the Workplace Ombudsman (OWO) as of 1 July 2007. The purpose of this transfer is to ensure that the necessary funding is available to OWO to carry out its new compliance functions, which were previously handled by DEWR. The obligations imposed by this legislation are primarily administrative and procedural. The Finance Minister, through delegation, must ensure that the necessary funds are appropriately transferred to the new agency undertaking the function. This involves the preparation and issuance of a direction under section 32 of the FMA Act, which must be in compliance with the requirements of the Legislative Instruments Act 2003. Furthermore, both the DEWR and the OWO are required to be consulted in the preparation of the instrument, ensuring transparency and fairness in the transfer process. Failure to comply with the provisions of the FMA Act or the directions issued under it can result in various consequences. While the specific offences and penalties are not detailed in the explanatory statement, breaches of financial management and accountability laws can generally lead to both civil and criminal liabilities. Civil penalties might include fines or other financial penalties, while criminal penalties could include imprisonment, depending on the severity and intent of the breach. The maximum penalties for such offences would be determined by the relevant legislation and the specific nature of the breach.