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 13 October 2005 and numbered 7 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.
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, and the Division Manager, Financial Reporting and Cash Management Division.
Purpose of the instrument
The instrument directs that departmental outputs totalling $10,000,000, provided to the Department of Employment and Workplace Relations in Appropriation Act (No. 1) 2005-06, be transferred to the Office of the Australian Building and Construction Commissioner.
Background
As part of its response to the Cole Royal Commission into the Building and Construction Industry, Cabinet agreed to establish the Office of the Australian Building and Construction Commission (JH/03/0145/CAB refers). 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.
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 these functions is transferred to the Office of the Australian Building and Construction Commissioner.
The amount to be transferred has been agreed between the Chief Financial Officers of the Department of Employment and Workplace Relations and the Office of the Australian Building and Construction Commissioner in line with established processes.
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 Office of the Australian Building and Construction Commissioner item listed in column 1.
Overview
The Financial Management and Accountability Act 1997 (FMA Act) was enacted by the Parliament of Australia to provide a framework for the financial management of Commonwealth entities, ensuring accountability and transparency in the use of public funds. Section 32 of the Act addresses the issue of appropriations when the functions of an agency are transferred to another entity, whether through abolition or otherwise. This section allows the Finance Minister to issue directions for the transfer of appropriations to the new entity responsible for the functions, ensuring continuity and appropriate allocation of funds. The purpose of the 2005 instrument under section 32 was to facilitate the transfer of $10,000,000 in departmental outputs from the Department of Employment and Workplace Relations to the Office of the Australian Building and Construction Commissioner, in response to the establishment of the latter as recommended by the Cole Royal Commission into the Building and Construction Industry. This transfer aligns with the policy objective of effectively monitoring and promoting compliance with relevant legislation within the building and construction industry.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) applies to any situation where a function of an existing Agency is transferred to another Agency, either due to the abolition of the old Agency or for other reasons. Specifically, section 32 of the FMA Act allows the Finance Minister to issue directions for the transfer of appropriations from the old Agency to the new Agency if a function is reassigned. The Finance Minister has delegated this authority 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 jurisdictional reach ensures that appropriations are appropriately adjusted and managed when agency functions change. The instrument in question pertains to the transfer of $10,000,000 from the Department of Employment and Workplace Relations to the Office of the Australian Building and Construction Commissioner, following the establishment of the latter in response to the Cole Royal Commission into the Building and Construction Industry. This transfer aligns with the established processes and agreements between the Chief Financial Officers of the involved departments.
Key Provisions
The instrument (F2005L03251) under Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) pertains to the transfer of appropriations when an agency’s functions are reassigned to another agency. Specifically, section 32(2)(a) empowers the Finance Minister to issue directions to reallocate funds appropriated for a function from the old agency to the new agency, provided the function transfer occurs due to the abolition of the old agency or for other reasons. In this instance, the instrument mandates the transfer of $10,000,000 in departmental outputs from the Department of Employment and Workplace Relations to the Office of the Australian Building and Construction Commissioner (ABCC).
The obligations imposed by this instrument are centred on ensuring the smooth financial transition of functions between agencies. The Chief Executive of the Department of Finance and Administration, who holds the authority delegated by the Finance Minister, directs that specific funds be moved from one agency to another. This process involves both agencies’ Chief Financial Officers agreeing on the amount to be transferred, adhering to established procedures. The instrument thus formalises the reallocation of financial resources to align with the new functional responsibilities of the ABCC, which was established in response to recommendations from the Cole Royal Commission.
Failure to comply with the provisions set out in the instrument could potentially result in legal and financial repercussions. The FMA Act does not explicitly detail offences or penalties for breaches in this context; however, any deviation from the approved financial management practices or failure to follow the directions could lead to scrutiny or investigation by relevant authorities. The broader framework of the FMA Act ensures that public funds are managed responsibly and transparently, and any non-compliance could attract sanctions under other relevant legislative provisions.
In summary, the instrument under section 32 of the FMA Act facilitates the transfer of $10,000,000 from the Department of Employment and Workplace Relations to the ABCC, ensuring that financial resources are aligned with the new functional responsibilities of the ABCC. This transfer is governed by the agreement between the Chief Financial Officers of the involved agencies and is overseen by the Chief Executive of the Department of Finance and Administration. While the specific penalties for non-compliance are not detailed in the instrument, adherence to the FMA Act’s principles of responsible financial management is paramount.