EXPLANATORY STATEMENT
SUBJECT AUDIT ACT 1901
FINANCE REGULATIONS (AMENDMENT)
1989 No. 56
ISSUED ON THE AUTHORITY OF THE MINISTER FOR FINANCE
Subsection 71(1) of the Audit Act 1901 (the Act) provides that the Governor-General may make regulations (not inconsistent with the provisions of the Act) for carrying out the provisions of the Act.
Subsection 4(1) of the Acts Interpretation Act 1901 allows, among other things, that where an Act provides for the making of an instrument of a legislative character (including regulations), that instrument may be made before the conferring section of the Act comes into operation. Subsection 4(2) provides that such an instrument takes effect on the day on which the conferring section comes into operation.
The Finance Regulations (Amendment) (the regulations) depend on amendments to section 49 of the Act which have not been proclaimed to commence before the regulations are made. The regulations are therefore made under section 4 of the Acts Interpretation Act 1901. By virtue of section 4(2) of the Acts Interpretation Act, the regulations will come into operation on the day the amendments to section 49 commence.
The existing provisions of section 49 of the Act provide that the format of the Monthly Statement of Financial Transactions which is published each month by the Minister for Finance, shall be varied only with the prior approval of both Houses of Parliament. The amendments to section 49, as contained in sections 6 and 19 of the Audit Amendment Act 1988, provide for the format of the Monthly Statement to be prescribed in the Finance Regulations and for the repeal of the current form.
The amendment to Finance Regulation 14 prescribes the format for the Monthly Statement. The format is in accordance with the proposed Form 2 as shown in the schedule to the Regulations.
The format of the Monthly Statement is currently prescribed in Form 4 of the Schedule to the Act. The current form will be repealed by proclaiming sections 6 and 19 of the Audit Amendment Act 1988 and it will be replaced by the proposed Form 2. The proclamation of these sections are subject to the regulations being allowed by both Houses of Parliament. This will prevent a hiatus developing (ie a situation where there is no prescribed form - the current form being repealed and the proposed form being disallowed).
The amendment to Regulation 5 removes the Minister’s power to vary the Form 2. That is, variations to the format of the Statement will need to be made by an amendment to the Finance Regulations. This is consistent with the Parliament’s wishes to control the format of the Monthly Statement.
The amendment to Regulation 14 (together with the proposed Form 2) introduces changes to the format of the monthly statement. Since 1973/74, the presentation of Commonwealth Budgetary information has been based on internationally accepted principles of functional classification of receipts and expenditure developed by the United Nations. Primarily, the changes to the format effected by the regulations tidy up the terminology of the Monthly Statement to line up with current classifications in the Budget documents. The changes are as follows:
OUTLAYS
• “Payments to Other Governments” is changed to “Assistance to Other Governments” to ensure consistency with international terminology for the classification of government expenditure.
• The “Allowance for Prospective Wage and Salary Increases (Non-Defence)” and “Other Contingency Reserves” items are combined into a single item “Contingency Reserve”. This makes the presentation of these outlays consistent with their presentation in the Budget papers which, since 1978-79, have been reported as a single item.
REVENUE
• The title of this section of the Statement is changed from “Receipts” to “Revenue” to ensure consistency with international terminology for the classification of government revenue.
• In the Monthly Statement, information on the Medicare levy is not provided because the levy is not separately identified at the point of collection. The current format implicitly incorporates the levy in the figures for gross PAYE, PAYE refunds and other individuals tax collections. It is proposed to make this fact clearer by way of a footnote to the Statement. Information on the Medicare levy is provided in Budget Paper No 1 but those figures are only estimates.
• On 1 July 1987 the bank account debits tax law was extended to cover debits made to payment order accounts with non-bank financial institutions. Accordingly, the reference to a ‘bank account debits tax’ in the Statement is changed to a ‘debits tax’.
• The word ‘net’ after the heading ‘Other Taxes. Fees and Fines’ is deleted from the current format of the Statement because all Commonwealth Budget revenue is already presented on a net basis. This change makes this item consistent with the presentation of the other revenue items in both the Statement and Budget Paper No 1.
• In Budget Paper No 1 the ‘Remissions’ item has been reclassified to ‘Other Taxes, Fees and Fines’. The change to the current Statement format conforms with this approach.
• In Budget Paper No 1 the item ‘Miscellaneous Receipts from Commonwealth enterprises’ has been reclassified, with the greater part now treated as an offset within outlays while the remainder, about $100,000, will be included in ‘Rent, Dividends and Royalties’; again the change to the current Statement format conforms with this classification change.
FINANCING TRANSACTIONS
• The reference to Discounts/Premiums in the existing form is replaced by a reference to Face Value Adjustment and clear reference is made to domestic debt financing figures at face value, totalling to cash value. The previous reference to ‘Discounts/Premiums’ is the difference between the par (or face value) of securities issued or redeemed and the cash received as loan proceeds or paid out to redeem loans. Because the amount of discounts or premiums on the issue of Commonwealth securities is recorded as Public Debt Interest outlays at the time of redemption and issue respectively, this adjustment for any period may not be the same amount of discounts and premiums recorded as Public Debt Interest outlays for the same period.