Overview

The Financial Management and Accountability Act 1997 (FMA Act) was enacted to provide a framework for the financial management and accountability of Commonwealth entities. This Act aims to ensure that financial resources are used effectively, efficiently, and economically, and that public funds are managed responsibly and transparently. The Act establishes a system of financial management and accountability that is designed to promote sound decision-making, reduce waste and fraud, and enhance the quality of financial reporting. The FMA Act was enacted by the Parliament of Australia and applies to all Commonwealth entities, including departments, agencies, and statutory authorities. The policy objective of the Act is to promote efficient and effective use of public resources, enhance accountability and transparency in financial management, and ensure compliance with relevant laws and regulations. The Financial Management and Accountability (Determination 2006/21) was introduced to vary and subsequently abolish two Federation Fund Accounts. This determination was made under section 20 of the FMA Act, and it aimed to provide for the continuation of the activities of the Federation Fund Accounts, the incorporation of the necessary changes, and to ensure that the determination is as clear and informative as possible. The determination was subject to disallowance by either House of Parliament, but it was not disallowed and therefore came into effect on the calendar day after the last day on which it could have been disallowed.

Scope and Application

The Financial Management and Accountability Act 1997 (FMA Act) Determination 2006/21, issued under the authority of the Minister for Finance and Administration, pertains specifically to the variation and eventual abolition of two Federation Fund Accounts. These Special Accounts are established under section 20 of the FMA Act, which mandates that all Commonwealth revenues must form one Consolidated Revenue Fund and may only be spent as appropriated by Parliament. The Special Accounts allow for designated spending from the Consolidated Revenue Fund on specified purposes, in this case, substantial capital projects marking the centenary of Federation. The determination applies to the Department of Communications, Information Technology and the Arts and the Department of Transport and Regional Services, which are the entities managing the funds. The scope of the legislation is national, as it concerns federal funds and their management within the Commonwealth of Australia. The changes proposed by the determination are necessary due to structural limitations in the previous establishing determination, which could not be varied without significant complexity. Once the balances of the existing Federation Fund Accounts are transferred to the new Special Accounts, the former will be abolished. The process of disallowance for such determinations is preserved under section 22 of the FMA Act and relevant regulations, although abolition determinations do not require tabling in Parliament.

Key Provisions

The main operative sections of Determination 2006/21 (paragraphs 1 to 4) establish the two new Special Accounts, the Federation Fund - Department of Communications, Information Technology and the Arts Special Account and the Federation Fund - Department of Transport and Regional Services Special Account. These sections outline the creation of these accounts to allow for the continuation of the activities of the existing Federation Fund Accounts, the incorporation of necessary changes, and to ensure that the determination is clear and informative. The balances from the existing Federation Fund Accounts are to be transferred to the new Special Accounts, and once the balances of the existing accounts reach zero, clause 3 of the determination will abolish the existing Federation Fund Accounts (paragraphs 5 to 7). The obligations and requirements imposed by the Act on the parties it governs are primarily procedural. The Finance Minister must table a copy of the establishing or varying determination in each House of Parliament within five sitting days, and either House may disallow the determination during this period (section 22 of the FMA Act). If not disallowed, the determination comes into effect on the calendar day after the last day on which it could have been disallowed. The Special Account determinations are exempt from certain subsections of the Legislative Instruments Act 2003 by Regulation 10 of the Legislative Instruments Regulations 2004 (paragraph 8). Furthermore, the affected agencies, the Department of Communications, Information Technology and the Arts and the Department of Transport and Regional Services, were provided with drafts of the instrument before finalisation and have agreed with the form of the instrument (paragraph 9). In terms of consequences for breach, the Explanatory Statement does not specify any particular offences or penalties associated with the failure to comply with the provisions of Determination 2006/21. However, breaches of the Financial Management and Accountability Act 1997 or other applicable legislation may result in civil or criminal consequences, including fines and imprisonment, depending on the severity of the breach. The maximum penalties for such breaches are determined by the relevant legislation and may vary depending on the specific offence.