EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Administration
Financial Management and Accountability Act 1997
Determination 2006/11 to establish a Special Account
Purposes of Determination 2006/11
The attached instrument makes a determination under subsection 20 (1) of the Financial Management and Accountability Act 1997 (FMA Act) to establish a Special Account entitled, Christmas Island Phosphate Mining Rehabilitation Special Account. It also specifies the nature of amounts that may be credited to, and the purposes for which amounts may be debited from, the Christmas Island Phosphate Mining Rehabilitation Special 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 establishes a Special Account, and sets out the amounts that may be credited to the Account and the purposes for which it may be debited. Special Accounts established 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 2006/11
Purpose of the Christmas Island Phosphate Mining Rehabilitation Special Account
The determination is required to establish a Special Account, enabling the Department of Transport and Regional Services (DoTARS) to manage the funding provided for the rehabilitation of phosphate mine sites on Christmas Island in accordance with the requirements of the lease between Phosphate Resources Limited and the Commonwealth.
The Christmas Island Phosphate Mining Rehabilitation Special Account is for activities undertaken to rehabilitate old phosphate mine sites on Christmas Island. The account relates to funding received from the conservation levy paid by Phosphate Resources Limited under the terms of its mining lease with the Commonwealth.
Given the funding arrangements, the Special Account can provide:
- transparency in, and timely access to, financial status reports for all parties involved;
- an assurance to Phosphate Resources Limited that the levy it pays is set aside for the agreed purposes; and
- a standing appropriation to allow DoTARS to approve spending proposals requiring payments across financial years.
Clause 5(1) specifies the purposes for which a Special Account can be debited.
- Paragraph 5(1)(a) describes the activities for which expenditure can be made from the Special Account.
- Paragraph 5(1)(b) gives the ability to reduce the balance of the Special Account without a corresponding payment. It 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.
- Paragraph 5(1)(c) allows the Special Account to be debited, in a manner that would otherwise be permitted by section 28 of the FMA Act. It is included to simplify accounting for these transactions.
Consultation
The Department of Transport and Regional Services is the agency affected by this instrument. The agency was provided with drafts of the instrument before it was finalised and agreed to 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 Christmas Island Phosphate Mining Rehabilitation Special Account
| Opening Balance 2006-07 2005-06 $’000 | Credits 2006-07 2005-06 $’000 | Debits 2006-07 2005-06 $’000 | Closing Balance 2006-07 2005-06 $’000 |
Christmas Island Phosphate Mining Rehabilitation Special Account | 2,510 | 1,200 | 1,000 | 2,710 |
2,357 | 1,144 | 991 | 2,510 |
Overview
The Financial Management and Accountability Act 1997 (FMA Act) was enacted to ensure effective financial management within the Australian government. It provides the framework for the establishment of Special Accounts, which allow for specified amounts from the Consolidated Revenue Fund to be expended for particular purposes. The Act was introduced to address the need for transparent and accountable financial management, particularly in relation to the allocation of funds for specific projects or initiatives. The Minister for Finance and Administration issued Determination 2006/11 under subsection 20(1) of the FMA Act to establish a Special Account entitled the Christmas Island Phosphate Mining Rehabilitation Special Account. This Special Account was established to manage the funding provided for the rehabilitation of phosphate mine sites on Christmas Island in accordance with the lease between Phosphate Resources Limited and the Commonwealth. The determination specifies the nature of amounts that may be credited to, and debited from, the Special Account. The primary objective of this determination is to provide transparency and timely access to financial status reports for all parties involved, ensuring that the conservation levy paid by Phosphate Resources Limited is set aside for the agreed purposes.
The determination was subject to disallowance by either House of Parliament within five sitting days of tabling. Once the disallowance period elapsed without any disallowance, the determination came into effect. The Department of Transport and Regional Services, being the affected agency, was consulted during the drafting process. No community consultation was conducted as the instrument was intended for machinery of government purposes only.
Scope and Application
The Financial Management and Accountability Act 1997 Determination 2006/11 establishes the Christmas Island Phosphate Mining Rehabilitation Special Account, applicable to the Department of Transport and Regional Services. This Special Account is created to manage funding for the rehabilitation of phosphate mine sites on Christmas Island, specifically utilising the conservation levy paid by Phosphate Resources Limited under its mining lease with the Commonwealth. The Act allows specified amounts from the Consolidated Revenue Fund to be allocated for this particular purpose, ensuring transparency and timely access to financial status reports for all parties involved. The Special Account also provides assurance to Phosphate Resources Limited that the levy it pays is set aside for the agreed purposes and enables the Department of Transport and Regional Services to approve spending proposals requiring payments across financial years. This legislation applies nationally as it is a Commonwealth Act, and its scope is limited to the purposes specified in the determination, with no community consultation conducted as it pertains solely to machinery of government purposes.
Key Provisions
The Determination 2006/11 under the Financial Management and Accountability Act 1997 (section 20(1)) establishes the Christmas Island Phosphate Mining Rehabilitation Special Account, outlining the permissible credit and debit transactions. Section 5(1) of the Determination specifies the activities for which the Special Account can be used, such as funding for the rehabilitation of old phosphate mine sites on Christmas Island. These activities must align with the terms of the lease between Phosphate Resources Limited and the Commonwealth, particularly regarding the conservation levy paid by Phosphate Resources Limited. The account allows for transparency and timely access to financial status reports, ensuring that funds are used solely for their intended purpose.
The obligations under this Act require the Department of Transport and Regional Services to manage the funding for the rehabilitation of the phosphate mine sites. This includes the responsibility to ensure that the funds are appropriately allocated and used for the specified activities. The account must be debited only for the purposes outlined in section 5(1), which include expenditures directly related to the rehabilitation of the mine sites and any adjustments to the account balance without necessitating a corresponding payment. The account cannot be debited for any other purpose, ensuring that all transactions remain within the scope of the Special Account's intended use.
There are specific consequences for breaches of the obligations outlined in this Determination. The Financial Management and Accountability Act 1997 mandates that the Finance Minister table a copy of the determination in each House of Parliament. Either House has the authority to disallow the determination within five sitting days of its tabling. If the determination is not disallowed, it comes into effect on the day after the last day on which it could have been disallowed. Failure to comply with the terms of the Special Account determination could result in financial mismanagement, potentially leading to legal and financial repercussions for the Department of Transport and Regional Services and Phosphate Resources Limited. The penalties for such breaches are not explicitly stated in the Determination but would be governed by the overarching provisions of the FMA Act and any other relevant legislation.