Explanatory Statement
Financial Management and Accountability Act 1997, Section 32 - Adjustment 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 29 February 2008 and numbered 9 of 2007-2008.
The legislative authority under which the instrument is made
Note: the Financial Management and Accountability Act 1997 (‘the FMA Act’) was amended by the Financial Framework Legislation Amendment Act (No. 1) 2007 (FFLA) Act. Amendments to section 32 of the FMA Act took effect on 25 September 2007. As this transfer of functions took place prior to 25 September 2007, under item 17 of the FFLA Act, this transfer is made under section 32 as it applied at that time.
Section 32 of 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 effective from 1 July 2007 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 Deregulation. By way of an instrument effective from 1 July 2007 made under section 53 of the FMA Act, the Chief Executive of the Department of Finance and Deregulation 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 part of the departmental item, being an amount of $5,277,986.00 under Appropriation Act (No. 1) 2006-2007 provided to the Department of Employment and Workplace Relations (DEWR) be transferred to the Workplace Authority (WPA).
Background
On 28 May 2007, a decision was made to transfer the Office of the Employment Advocate function from the Department of Employment and Workplace Relations to the Workplace Authority.
Transfers were previously made in an instrument entitled “Direction under Section 32, Financial Management and Accountability Act 1997”, dated 2 July 2007 and numbered 2 of 2007-2008.
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 DEWR be transferred to WPA.
In accordance with the Legislative Instruments Act 2003, DEWR and WPA were consulted in the preparation of this instrument.
Overview
The Financial Management and Accountability Act 1997, enacted by the Australian Parliament, was designed to ensure sound financial management and accountability within Commonwealth agencies. One of the key gaps it aimed to address was the need for a clear framework for the adjustment of appropriations when functions are transferred between agencies. The Act seeks to maintain financial integrity and transparency during such transitions. As stated in the Act, Section 32 particularly addresses the transfer of appropriations when an agency's functions are either abolished or otherwise reallocated. The 2008 instrument under Section 32, dated 29 February 2008, is an example of this legislative intent in action, detailing the transfer of funds from the Department of Employment and Workplace Relations to the Workplace Authority, thereby ensuring that financial resources are appropriately aligned with the new functional responsibilities.
Scope and Application
The Financial Management and Accountability Act 1997, as amended, governs the financial management of Commonwealth agencies, including the adjustment of appropriations when there is a change in agency functions. Specifically, section 32 of the FMA Act allows the Finance Minister to issue directions to transfer appropriations when a function previously performed by one agency is reassigned to another. The authority to make such directions has been delegated to the Chief Executive of the Department of Finance and Deregulation, and further to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division. This legislative framework ensures that financial resources are appropriately allocated in response to structural changes within the Commonwealth public sector. The application of the Act is national in scope, affecting all Commonwealth agencies subject to appropriation by Parliament. The Act does not specify exclusions or exemptions, but it is intended to be applied flexibly to accommodate various administrative changes, with the precise application sometimes determined by subordinate instruments.
Key Provisions
Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) addresses the adjustment of appropriations when there is a change in agency functions. Specifically, subsection 32(2)(a) of the Act allows the Finance Minister to issue directions to transfer funds from an old agency to a new agency when a function is transferred, whether due to the abolition of the old agency or for any other reason. This is contingent on the transfer of functions occurring prior to the amendments made by the Financial Framework Legislation Amendment Act (No. 1) 2007, which took effect on 25 September 2007. The authority to issue such directions has been delegated by the Finance Minister to the Chief Executive of the Department of Finance and Deregulation, and further delegated to the General Manager, Financial Management Group, and the Division Manager, Financial Reporting and Cash Management Division.
The obligations imposed by the Act on the relevant agencies and individuals are quite clear. The Finance Minister, through delegated authority, must ensure that any necessary adjustments to appropriations are made when there is a transfer of functions between agencies. This includes issuing directions to facilitate the transfer of specified amounts from the old agency to the new agency. The agencies involved, in this case the Department of Employment and Workplace Relations (DEWR) and the Workplace Authority (WPA), are required to comply with these directions and ensure the appropriate transfer of funds occurs as specified. Additionally, the Department of Finance and Deregulation, as well as the Financial Management Group and the Financial Reporting and Cash Management Division, must adhere to the processes established by the legislative delegation.
Failure to comply with the provisions of the FMA Act or the directions issued under it can result in significant consequences. Although the specific offences, penalties, or consequences for breach are not detailed within the explanatory statement, it is understood that non-compliance with legislative directions can lead to administrative, civil, or criminal penalties, depending on the nature and severity of the breach. The FMA Act itself, as well as other related legislation, would provide the framework for determining the appropriate penalties, which could include fines, legal action, or other remedial measures. It is essential for all parties involved to understand and adhere to their obligations under the Act to avoid these potential consequences.