EXPLANATORY STATEMENT

Issued by the authority of the Minister for Finance and Administration

Financial Management and Accountability Act 1997

Determination 2005/26 to vary a Special Account

Purposes of Determination 2005/26

The attached instrument makes a determination under subsection 20 (2) of the Financial Management and Accountability Act 1997 (FMA Act) to vary a previous Special Account Determination.  This variation is in relation to the Determination titled Determination 2000/13, which established the Official Administered Payment Account for Other Agencies Account.

Special Accounts Generally

In accordance with the Constitution, all revenues or moneys raised or received by the Executive Government of the Commonwealth form one Consolidated Revenue Fund (CRF) and may not be used unless in accordance with an appropriation by the Parliament for the purposes of the Commonwealth.  This determination varies a Special Account.  Special Accounts varied by determination are supported by an appropriation under section 20 of the FMA Act.  In effect, Special Accounts allow specified amounts from the CRF to be expended for a particular specified purpose.

The Finance Minister must table a copy of a determination relating to a Special Account in each House of Parliament.  Either House may disallow a determination within five sitting days of tabling.  If the determination is not disallowed, it comes into effect on the calendar day after the last day on which it could have been disallowed.  Regulation 10 of the Legislative Instruments Regulations 2004 preserves the disallowance provisions under section 22 of the FMA Act by exempting Special Account determinations from subsections 57(2) and 57(5) of the Legislative Instruments Act 2003.

The notes to the determination identify legislation and other laws that allow or require amounts to be credited to, or debited from, the Special Account.

Operation of the Determination 2005/26

Changes required

This determination varies the Determination 2000/13, which established the Official Administered Payment Account for Other Agencies Account.

The determination is required in order to give effect to changes that are required to the Official Administered Payment Account for Other Agencies Account. The current purposes of the Special Account are:

‘…payments made overseas by DFAT overseas posts on behalf of an Agency (within the meaning of the Act), where those payments could be made from an appropriation available to the Agency, and it is intended that DFAT will be reimbursed by the Agency for the payments.’

Changes required

The changes required to the old account are set out below:

• the addition of the ability to make payments on behalf of bodies subject to the Commonwealth Authorities and Companies Act 1997;
• the ability to make payments to Australian Government entities that are received on their behalf overseas;
• changing the credit clause to only allow amounts from Australian Government entities that will form payments made overseas or amounts received overseas that will form payments made to Australian Government entities to be credited to the Special Account; and
• a change in the Special Account’s name from Official Administered Payment Account for Other Agencies Account to Administered Payments and Receipts for Other Entities Special Account, in order to better describe what the Special Account is used for.

As part of a programme to enhance the clarity of Special Account determinations and to remove any areas of doubt over the scope of the purposes of Special Accounts, the following changes are being incorporated within the determinations of all Special Accounts, where appropriate, and where the need for other variations arise:

• a provision to debit amounts relating to incidental activities.  This allows administration costs, including such items as auditing, reporting, budgeting, accounting and information technology services incurred in the course of operating the Special Account, to be debited from the Special Account.  The existing purpose clause would often allow the debiting of the Special Account for these costs, depending on the degree of directness of connection of the costs with other purposes of the Special Account.  The inclusion of the new incidental clause removes the need to obtain legal advice on the degree of directness of connection for individual transactions;
• a capacity to return excess amounts to the Budget (that is, reduce the balance of the Special Account without a real or notional payment).  This provision does not allow amounts to be transferred to another Special Account, or to be allocated for any other purpose, that is not consistent with the purposes of the Special Account;
• a clause to allow for amounts to be repaid when another Act or law allows it.  This has always been permitted by section 28 of the FMA Act, but is now included in determinations to simplify accounting for these transactions; and
• notes that identify general credits and debits that can be made to Special Accounts, for information purposes, in reliance on other laws.

Effect of this determination

This determination varies Determination 2000/13 to make its purposes and appearance consistent with a new template for all Special Account determinations.  The compiled determination will be in format that makes the determination as clear and informative as possible

Consultation

The Department of Foreign Affairs and Trade is the agency affected by this instrument.  The agency was provided with drafts of the instrument before it was finalised and agree with the form of the instrument.  No community consultation was carried out as the instrument is for machinery of government purposes only (see sections 17 and 18 of the Legislative Instruments Act 2003).

Estimates of transactions on the Administered Payments and Receipts for Other Entities Special Account