Direction under Section 32, Financial Management and Accountability Act 1997 - Adjustments of Appropriations on Change of Agency Functions (No. 6 of 2007-2008)

Overview

The Financial Management and Accountability Act 1997 was enacted to establish a framework for the financial management and accountability of Commonwealth entities. The Act addresses the need to ensure that appropriations are aligned with the functions of government agencies, particularly when those functions are transferred between agencies. The problem it seeks to resolve is the misalignment of financial resources with the agencies responsible for executing particular functions. The Act was enacted by the Australian Parliament and aims to maintain fiscal integrity and transparency in the allocation and use of public funds. An instrument issued under the Act in 2007, delegates the power to adjust appropriations to the Chief Executive of the Department of Finance and Administration, who further delegated it to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. This delegation facilitates the transfer of appropriations in response to changes in agency functions, as demonstrated by the transfer of funds from the Office of Workplace Services to the Office of the Workplace Ombudsman following legislative amendments.

Scope and Application

The instrument, "Direction under Section 32, Financial Management and Accountability Act 1997", is designed to facilitate the transfer of appropriations from one government agency to another following a change in the functions of those agencies. Specifically, the Act applies to instances where a function of an existing agency (referred to as the old Agency) is transferred to a new agency (referred to as the new Agency) due to the abolition of the old Agency or for any other reason. The Act allows the Finance Minister to issue directions for the transfer of appropriations related to these functions. Under section 62 of the Financial Management and Accountability Act 1997, the Finance Minister has delegated this power 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. This delegation effectively means that the instrument is issued by the Division Manager, Financial Reporting and Cash Management Division. The instrument in question directs the transfer of specific appropriations from the Office of Workplace Services (OWS) to the Office of the Workplace Ombudsman (OWO), which was established by the Workplace Relations Amendment (A Stronger Safety Net) Act 2007, effective from 1 July 2007. The OWO assumes the compliance functions of the OWS and gains additional responsibilities for investigations and prosecutions concerning the Fairness Test and cases of employer duress in negotiations of Australian Workplace Agreements. The instrument specifies the exact amounts to be transferred and is prepared in consultation with both OWS and OWO as required by the Legislative Instruments Act 2003.

Key Provisions

The key provisions of the instrument, as outlined in the Explanatory Statement, pertain to Section 32 of the Financial Management and Accountability Act 1997 (FMA Act). Specifically, this section addresses the adjustment of appropriations when there is a change in the functions of an agency. In this instance, the instrument mandates the transfer of specific funds from the Office of Workplace Services (OWS) to the Office of the Workplace Ombudsman (OWO). This transfer is a result of the Workplace Relations Amendment (A Stronger Safety Net) Act 2007, which established the OWO as of 1 July 2007, and it is intended to align the financial resources with the new agency’s expanded responsibilities. Under this Act, the obligations imposed on the relevant parties are quite clear. The Finance Minister, under Section 32(2)(a) of the FMA Act, has the authority to direct the transfer of appropriated funds from the old agency to the new agency. This power 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. These officials are tasked with ensuring the smooth transfer of the specified funds from OWS to OWO, as detailed in the instrument. The instrument itself specifies the exact amounts to be transferred, which include $3,339,016.31 in departmental outputs under Appropriation Act (No. 1) 2006-2007, $9,918,000.00 in departmental outputs under Appropriation Act (No. 3) 2006-2007, and $9,441,889.35 in equity injections under Appropriation Act (No. 4) 2006-2007. In terms of compliance and potential consequences, the Act does not explicitly detail specific offences or penalties for non-compliance within the explanatory statement. However, the importance of adhering to the directives given under Section 32 of the FMA Act cannot be understated. Failure to properly transfer the appropriated funds as directed could lead to financial mismanagement and accountability issues, which may attract scrutiny or further legislative action. The instrument itself underscores the need for consultation with the affected agencies, OWS and OWO, to ensure the changes are implemented correctly and transparently. In summary, the instrument under Section 32 of the FMA Act provides a clear directive for the transfer of specific funds from OWS to OWO, in light of the creation of the latter and its new responsibilities. The obligations are primarily on the Finance Minister and the delegated officials to ensure these funds are correctly allocated. While the explanatory statement does not detail specific penalties, the importance of compliance is implicitly underscored by the need for consultation and proper implementation.