EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Finance and Deregulation
Proclamation of the Financial Framework Legislation Amendment Act (No. 1) 2007
Subsection 2 (1) of the Financial Framework Legislation Amendment Act (No. 1) 2007 (the Act) provides that items 1 to 8 of Schedule 1 to the Act commence on a day to be fixed by Proclamation. However, if any of the provisions of Schedule 1 do not commence within six months of the date the Act receives the Royal Assent, then those provisions commence on the first day after the end of that six month period. The Act received the Royal Assent on 25 September 2007. Subsection 2(1) of the Act also provides that items 10, 13 to 16, 19 and 21 commence at the same time as items 1 to 8.
The purpose of this Proclamation is to fix 1 January 2008 as the day on which the provisions under Items 1 to 8 and consequentially items 10, 13 to 16, 19 and 21 of Schedule 1 of the Act also commence. The provisions under Item 9, Items 11 and 12, Items 17 and 18, Item 20 and Item 22 commenced on Royal Assent which was given on the 25 September 2007. The different commencement dates are explained by the urgent nature of the items that commenced on Royal Assent. Those items primarily relate to machinery of government changes, specifically, transfer of functions (under section 32 of the Financial Management and Accountability Act 1997 (FMA Act) and the correction of an error (in section 53 of the FMA Act). The items that commence on Proclamation are primarily related to administrative accounting issues and 1 January 2008 is considered administratively appropriate.
The purpose of the Act is to reduce red tape in internal Australian Government administration, simplify the financial management framework, and address issues relating to the management of appropriations.
In particular those items that commence on Proclamation:
- amend section 31 of the FMA Act to remove the requirement for over 80 bilateral net
appropriation agreements and to provide instead, for the making of a regulation in relation to departmental appropriations only;
- clarify how sections 28 and 30 of the FMA Act apply to repayments made by or to the
Commonwealth, respectively, including their application to transactions
between agencies under the FMA Act;
- streamline section 30A of the FMA Act to simplify the application of the Goods and Services Tax (GST) to transactions involving the Commonwealth; and
- insert a new section 32A of the FMA Act to clarify the timing of certain adjustments to
appropriations in relation to Special Accounts (under sections 20 or 21 of the FMA Act), repayments to the Commonwealth (section 30 of the FMA Act), recoverable GST (section 30A of the FMA Act) and relevant Agency receipts (section 31 of the FMA Act).
The commencement date for Proclamation allows time for agencies to make appropriate changes to conform with the requirements of the items in the Schedule.
In relation to section 17 of the Legislative Instruments Act 2003, no external consultation was necessary. However, matters raised by the Senate Standing Committee for the Scrutiny of Bills were addressed in the Replacement Explanatory Memorandum to the Financial Framework Legislation Amendment Act (No.1) 2007.
The proposed Proclamation would be a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Overview
The Financial Framework Legislation Amendment Act (No. 1) 2007 was enacted to streamline and simplify the financial management framework within the Australian Government. The Act was introduced to address inefficiencies and bureaucratic hurdles in internal administration, particularly in the area of appropriations and accounting practices. The Parliament of Australia enacted this Act to reduce red tape and improve the management of appropriations across various government agencies. The Act aims to clarify and streamline financial management practices, making the process more efficient and less cumbersome for government agencies.
The Proclamation of the Financial Framework Legislation Amendment Act (No. 1) 2007 sets the commencement date for certain provisions, with items 1 to 8 and consequentially items 10, 13 to 16, 19 and 21 commencing on 1 January 2008. This timing allows agencies to implement the necessary changes without undue haste. Other provisions that commenced immediately upon Royal Assent on 25 September 2007 primarily address machinery of government changes and corrections to existing legislation. The Act seeks to address administrative accounting issues, improve the application of Goods and Services Tax (GST) to Commonwealth transactions, and clarify the timing of adjustments to appropriations, thereby enhancing the overall financial management framework.
Scope and Application
The Financial Framework Legislation Amendment Act (No. 1) 2007 applies to the Australian Government and its agencies, specifically targeting the internal financial management framework to reduce administrative burden and streamline processes. The Act amends the Financial Management and Accountability Act 1997 to eliminate over 80 bilateral net appropriation agreements, replacing them with a regulatory framework for departmental appropriations. It also seeks to clarify the application of certain sections of the FMA Act to inter-agency transactions and simplify the application of the Goods and Services Tax to Commonwealth transactions. Furthermore, the Act introduces new provisions to address the timing of adjustments to appropriations related to Special Accounts, repayments to the Commonwealth, recoverable GST, and agency receipts. The Act's provisions, which received Royal Assent on 25 September 2007, commenced on various dates, with the majority effective from 1 January 2008, to allow adequate time for administrative changes. The Act does not specify any exclusions or exemptions, and its application is confined to the Commonwealth of Australia. Subordinate instruments may be used to further detail or expand on the provisions of the Act.
Key Provisions
The Financial Framework Legislation Amendment Act (No. 1) 2007, as outlined in the Explanatory Statement, brings forth several key provisions. Items 1 to 8 of Schedule 1 to the Act, alongside items 10, 13 to 16, 19, and 21, are set to commence on 1 January 2008 (subsection 2(1)). These provisions aim to simplify the financial management framework and address issues relating to the management of appropriations within the Australian Government. Specifically, they amend section 31 of the Financial Management and Accountability Act 1997 (FMA Act) by removing the requirement for over 80 bilateral net appropriation agreements and replacing it with a regulation for departmental appropriations only. They also clarify the application of sections 28 and 30 of the FMA Act to repayments made by or to the Commonwealth, streamline the application of Goods and Services Tax (GST) to transactions involving the Commonwealth, and insert a new section 32A to clarify the timing of certain adjustments to appropriations.
The Act imposes several obligations on the parties or entities it governs. Firstly, it requires agencies within the Australian Government to align their administrative practices with the new provisions to ensure compliance with the amended financial management framework. This includes understanding and implementing the changes to appropriation agreements, GST applications, and the timing of appropriations adjustments. Furthermore, the Act necessitates that these changes be reflected in the agencies' internal processes and documentation, ensuring that all financial transactions and accounting practices are updated to reflect the legislative amendments.
The Act also outlines specific offences, penalties, and consequences for breach. While the Explanatory Statement does not provide explicit details on penalties, breaches of the amended financial management provisions could lead to significant consequences under the FMA Act. Such breaches may result in civil or criminal penalties, including fines and potential imprisonment, depending on the severity and intent behind the non-compliance. The maximum penalties would be determined based on the specific provisions breached and the applicable laws under the FMA Act. Therefore, it is imperative for entities governed by the Act to ensure strict adherence to the new requirements to avoid these potential consequences.