EXPLANATORY STATEMENT
Select Legislative Instrument 2011 No. 259
Subject - Financial Management and Accountability Act 1997
Financial Management and Accountability Amendment
Regulations 2011 (No. 6)
The Financial Management and Accountability Act 1997 (FMA Act) provides a framework of rules for the proper management of public money and public property by Chief Executives and officials of FMA Act agencies.
Subsection 65(1) of the FMA Act provides that the Governor-General may make regulations prescribing matters required or permitted by the FMA Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the FMA Act.
Section 5 of the FMA Act provides that, for the purposes of the FMA Act, a prescribed Agency means a body, organisation or group of persons prescribed by the regulations for the purposes of that definition. Agencies are currently prescribed in Schedule 1 to the Financial Management and Accountability Regulations 1997 (the Principal Regulations).
The Regulations amend Schedule 1 to the Principal Regulations to prescribe the National Mental Health Commission (NMHC), the Independent Hospital Pricing Authority (IHPA) and the National Health Performance Authority (NHPA) as FMA Act Agencies under section 5 of the FMA Act. Regulation 22CA is removed as it made transitional arrangements, no longer relevant, for audit committees in former FMA Act Agencies, Centrelink and Medicare, now part of the Department of Human Services.
The Governor-General has made an Executive Order to establish NMHC, as an Executive Agency under the Public Service Act 1999 (PS Act), on 1 January 2012.
The date of commencement of Schedule 1 to the National Health Reform Amendment (Independent Hospital Pricing Authority) Act 2011, in which IHPA was established as a Statutory Agency under the PS Act, was proclaimed by the Governor-General as 15 December 2011.
Section 102 of the National Health Reform Act 2011 established NHPA as a Statutory Agency under the PS Act, commencing by proclamation on 21 October 2011.
The Regulations reflect that NMHC is an Executive Agency under the PS Act, whereas IHPA and NHPA are Statutory Agencies under the PS Act, as indicated in Notes A and B to Schedule 1 of the FMA Regulations respectively.
Consistent with section 17 of the Legislative Instruments Act 2003, consultation has taken place with the Department of the Prime Minister and Cabinet (PM&C), because it is responsible for advising on the creation of Executive Agencies and because the NMHC is within the PM&C portfolio. Consultation has also taken place with the Department of Health and Ageing with respect to IHPA and NHPA. Also, the primary legislation establishing IHPA and NHPA was developed in consultation with State and Territory governments as part of the National Health Reform Agreement agreed by the Council of Australian Governments in August 2011.
The Office of Best Practice Regulation advised that a Regulatory Impact Statement is not necessary, as the amendments are likely to have no or low regulatory impacts on business and individuals or the economy.
The FMA Act specifies no conditions that need to be met before the power to make the Regulations may be exercised.
These Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence, with respect to NHPA and Regulation 22CA, on the day after they are registered on the Federal Register of Legislative Instruments. With respect to IHPA, commencement is concurrent with the commencement of the National Health Reform Amendment (Independent Hospital Pricing Authority) Act 2011 on 15 December 2011. With respect to NMHC, commencement is 1 January 2012.
Authority: Subsection 65(1) of the Financial Management and Accountability Act 1997.
Overview
The Financial Management and Accountability Amendment Regulations 2011 (No. 6) were enacted to address the need for aligning the Financial Management and Accountability Act 1997 (FMA Act) with recent organisational changes in the public sector, particularly the establishment of new health-related agencies. These regulations amend the Financial Management and Accountability Regulations 1997, prescribing the National Mental Health Commission (NMHC), the Independent Hospital Pricing Authority (IHPA), and the National Health Performance Authority (NHPA) as FMA Act agencies. By doing so, the regulations ensure these newly established entities are subject to the financial management and accountability framework outlined in the FMA Act, thereby promoting transparency and effective oversight of public funds and property. The amendments were made in accordance with subsection 65(1) of the FMA Act, which empowers the Governor-General to issue regulations necessary for the Act's implementation. The regulations also remove outdated transitional arrangements for audit committees in former FMA Act agencies, ensuring the legislative framework remains current and relevant.
Scope and Application
The Financial Management and Accountability Amendment Regulations 2011 (No. 6) amend the Financial Management and Accountability Regulations 1997 to incorporate the National Mental Health Commission (NMHC), the Independent Hospital Pricing Authority (IHPA), and the National Health Performance Authority (NHPA) as prescribed agencies under the Financial Management and Accountability Act 1997 (FMA Act). This legislative instrument aligns with the creation of these entities as stipulated by other federal statutes, specifically the Public Service Act 1999 and the National Health Reform Act 2011. The NMHC, an Executive Agency, and IHPA and NHPA, both Statutory Agencies, are now subject to the financial management and accountability framework provided by the FMA Act. The regulations specify the commencement dates for each entity, reflecting their establishment dates under their respective acts. The amendments also remove outdated transitional arrangements for audit committees in former FMA Act agencies Centrelink and Medicare, which are now part of the Department of Human Services. These Regulations, made under the authority of the FMA Act, are intended to ensure these new agencies comply with the financial management standards set forth by the Commonwealth.
Key Provisions
The Financial Management and Accountability Amendment Regulations 2011 (No. 6) amend the Financial Management and Accountability Regulations 1997 by prescribing the National Mental Health Commission (NMHC), the Independent Hospital Pricing Authority (IHPA), and the National Health Performance Authority (NHPA) as FMA Act Agencies. These agencies are now subject to the rules set forth in the Financial Management and Accountability Act 1997 (FMA Act). The regulations reflect the different statuses of these agencies under the Public Service Act 1999, with NMHC being an Executive Agency and IHPA and NHPA being Statutory Agencies. Additionally, the regulations remove Regulation 22CA, which had made transitional arrangements for audit committees in former FMA Act Agencies, Centrelink and Medicare, now part of the Department of Human Services.
These Regulations impose obligations on the NMHC, IHPA, and NHPA to adhere to the financial management and accountability provisions outlined in the FMA Act. This includes proper management of public money and public property by their Chief Executives and officials. By prescribing these agencies, the Regulations ensure that they are subject to the same financial management standards as other FMA Act Agencies, thereby promoting transparency, accountability, and efficient use of public resources. The amendments also ensure that these agencies comply with the financial management framework designed to safeguard public funds and assets.
The FMA Act itself does not specify offences, penalties, or civil/criminal consequences for breaches of its provisions. However, the overarching framework established by the FMA Act allows for potential legal action against individuals or entities that fail to comply with its requirements. Breaches of financial management and accountability provisions can lead to investigations by the Australian National Audit Office, which may result in recommendations for disciplinary action, financial restitution, or other remedial measures. The FMA Act provides a basis for ensuring that public funds are managed responsibly and that public agencies are held accountable for their financial practices.