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 19 January 2007 and numbered 9 of 2006-2007.
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.
By way of an instrument dated 19 February 2003 made under section 62 of 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 3 April 2006 made under section 53 of the FMA Act, 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. The direction is issued by the Division Manager, Financial Reporting and Cash Management Division.
Purpose of the instrument
The instrument directs that departmental appropriation in the amount of $383,798.73 provided to the Migration Review Tribunal (MRT) in Appropriation Act (No.1) 2005-2006 and departmental appropriation in the amount of $482,968.80 provided to the Refugee Review Tribunal (RRT) in Appropriation Act (No.1) 2005-2006 be transferred to the Migration Review Tribunal and Refugee Review Tribunal (the MRT-RRT).
Background
On 30 June 2006 the MRT and the RRT were abolished. On 1 July 2006, the MRT-RRT became a prescribed agency. The functions which were previously performed by the MRT and the RRT will from 1 July 2006 be performed by the MRT-RRT. An appropriation adjustment, pursuant to
section 32 of the FMA Act, is required to ensure that appropriation provided to the MRT and the RRT is transferred to the MRT-RRT for the functions previously performed by the MRT and the RRT.
Notes on the instrument
The instrument provides that the amounts set out in column 4 of the table for the appropriation items in column 1 for the MRT and RRT be transferred to the MRT-RRT.
In accordance with the Legislative Instruments Act 2003, the MRT-RRT was consulted in preparation of this instrument.
Overview
The Financial Management and Accountability Act 1997, enacted by the Commonwealth Parliament, was introduced to ensure robust financial management and accountability within the Australian public sector. One of the critical issues the Act aimed to address was the effective management of appropriations when there are changes in the functions of government agencies. This is particularly pertinent when an agency is abolished or its functions are transferred to another agency, necessitating adjustments to the appropriated funds. Section 32 of the Act specifically deals with the adjustments of appropriations in such circumstances, ensuring that funds are correctly allocated to reflect the current operational structure and responsibilities. The policy objective is to maintain financial integrity and clarity, ensuring that public funds are used efficiently and effectively in accordance with the legislative intent.
Scope and Application
The Financial Management and Accountability Act 1997, specifically Section 32, pertains to adjustments of appropriations when there is a change in the functions of an agency, such as when a function is transferred to another agency or the original agency is abolished. This Act applies to the Commonwealth and encompasses any agency whose functions are altered, necessitating a reallocation of appropriated funds to ensure continuity of services. The Act allows for the transfer of appropriations from the old agency to the new agency executing the same or similar functions. The scope of this legislation extends to the appropriation adjustments required by such changes, and it is implemented through subordinate instruments, such as the directions issued by the Division Manager, Financial Reporting and Cash Management Division, as authorised by the Finance Minister and delegated to the appropriate officials within the Department of Finance and Administration. These instruments are crafted to facilitate the smooth transition of financial resources to the new agency performing the transferred functions.
Key Provisions
Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) primarily deals with the adjustment of appropriations when there is a change in the functions of an agency. Specifically, it applies when a function previously performed by one agency (the old Agency) is transferred to another agency (the new Agency), either due to the abolition of the old Agency or for other reasons. This section enables the Finance Minister to issue directions for the transfer of funds appropriated for the function from the old Agency to the new Agency. For example, the instrument issued on 19 February 2003 under section 62 of the FMA Act, delegated the power to the Chief Executive of the Department of Finance and Administration, who subsequently delegated it further to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division.
The obligations under this Act require the Finance Minister, or a designated delegate, to ensure that when an agency's functions are transferred, the appropriate adjustments to appropriations are made to reflect this change. This involves the meticulous transfer of funds that were previously allocated for the specific functions now being performed by the new Agency. For instance, the instrument dated 19 January 2007 directed the transfer of specified amounts from the Migration Review Tribunal (MRT) and the Refugee Review Tribunal (RRT) to the newly formed Migration Review Tribunal and Refugee Review Tribunal (MRT-RRT), following the abolition of the MRT and RRT on 30 June 2006.
There are potential consequences for non-compliance with the provisions of this Act. While the explanatory statement does not explicitly detail penalties, breaches of the Act or failure to comply with the directions issued under section 32 could lead to legal and administrative repercussions. These could include financial discrepancies, legal challenges, and reputational damage to the agencies involved. Additionally, the failure to properly adjust appropriations could result in underfunding of critical functions or mismanagement of public funds, which are serious issues that could attract scrutiny from oversight bodies and the public.