EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Administration
Financial Management and Accountability Act 1997
Determination 2006/27 to abolish a Special Account
Purposes of Determination 2006/27
The attached instrument makes a determination under subsection 20(3) of the Financial Management and Accountability Act 1997 (FMA Act) to abolish the Trustee Companies (ACT) Deposits Trust Account.
Special Accounts Generally
In accordance with the Constitution, all revenues or moneys raised or received by the Government of the Commonwealth form one Consolidated Revenue Fund (CRF) and may not be spent unless under an appropriation by the Parliament for the purposes of the Commonwealth. A Special Account is established by a determination that sets out the amounts that may be credited 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 amounts from the CRF to be spent on a purpose specified in the determination.
Determinations that establish Special Accounts, or vary determinations that establish Special Accounts, are subject to section 22 of the FMA Act. Section 22 of the FMA Act requires the Finance Minister to table a copy of the establishing or varying determination 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.
Special Accounts can be abolished by a determination of the Finance Minister. However, there is no requirement to table the determination to abolish a Special Account.
Operation of Determination 2006/27
This Determination abolishes the Trustee Companies (ACT) Deposits Trust Account, with effect from the date of registration on the Federal Register of Legislative Instruments.
Reasons for abolishing the Special Account
Section 10(1) of the Trustee Companies Act 1947 (ACT) (TC Act) required a trustee company to possess a paid up capital of not less than $40,000, of which $20,000 was to be invested in the purchase of Commonwealth debentures or inscribed stock held in the name of the ‘Treasurer of the Commonwealth’. From 1 October 2005, an amendment to the TC Act removed the requirement for trustee companies to invest in Commonwealth securities. Consequently, the agency managing the Special Account has requested that it be abolished.
Consultation
The Department of the Treasury is the agency affected by this instrument. The Agency was provided with drafts of the instrument and agrees with the form of the instrument. As the instrument is for internal machinery of government purposes only, no consultation was considered necessary with other persons (see sections 17 and 18 of the Legislative Instruments Act 2003).
Overview
The Financial Management and Accountability Act 1997 (FMA Act) was enacted by the Australian Parliament to provide a framework for the financial management and accountability of the Commonwealth Government. The Act aims to ensure the effective and efficient use of public funds and to maintain transparency and accountability in the financial management of the Commonwealth. Determination 2006/27, issued under subsection 20(3) of the FMA Act by the Minister for Finance and Administration, seeks to address a specific gap in the financial management structure by abolishing the Trustee Companies (ACT) Deposits Trust Account. This Special Account was established to ensure that trustee companies held a certain level of capital, part of which had to be invested in Commonwealth securities. However, following an amendment to the Trustee Companies Act 1947 that removed the requirement for such investments, the agency responsible for managing the Special Account has requested its abolition. The determination, which comes into effect on the date of its registration on the Federal Register of Legislative Instruments, reflects the changed legislative environment and the agency's operational needs.
Scope and Application
The Financial Management and Accountability Act 1997 Determination 2006/27 applies to the abolition of the Trustee Companies (ACT) Deposits Trust Account, which was established to hold funds for trustee companies in the Australian Capital Territory under specific conditions. This determination, made by the Minister for Finance and Administration, targets the specified Special Account, allowing the redirection of funds from the Consolidated Revenue Fund for a particular purpose. The determination is applicable within the Commonwealth jurisdiction, and it follows the legislative framework established by the Financial Management and Accountability Act 1997, ensuring that any determinations to establish or vary Special Accounts must be tabled in Parliament and may be disallowed if objections arise. Notably, the abolition of the Special Account does not require tabling in Parliament, streamlining the process for internal government adjustments. This determination reflects changes in legislative requirements, such as the amendment to the Trustee Companies Act 1947, which removed the necessity for trustee companies to invest in Commonwealth securities, thus making the Special Account obsolete.
Key Provisions
The main operative sections of the Financial Management and Accountability Act 1997 Determination 2006/27 (FMA Act) include sections 20(3) and 22, which provide the legal basis for establishing and abolishing Special Accounts. Section 20(3) allows the Finance Minister to make a determination to abolish a Special Account, while Section 22 requires the Minister to table a copy of any establishing or varying determination in each House of Parliament. The Determination 2006/27 specifically targets the Trustee Companies (ACT) Deposits Trust Account, abolishing it from the date of its registration on the Federal Register of Legislative Instruments (Section 10(1)).
The Act imposes obligations on the Finance Minister to establish or abolish Special Accounts through determinations. When making or varying a determination to establish a Special Account, the Minister must table a copy in each House of Parliament (Section 22). For determinations that abolish a Special Account, there is no requirement to table the determination in Parliament, but the abolition still takes effect from the date of registration on the Federal Register of Legislative Instruments. Additionally, the agency managing the Special Account, in this case, the Department of the Treasury, must request the abolition of the account if it is no longer necessary, such as due to changes in related legislation (Section 10(1)).
There are no explicit offences or penalties mentioned in the Determination 2006/27 for failing to comply with the provisions of the FMA Act concerning Special Accounts. However, the Act generally mandates that any breach of its provisions could result in civil or criminal consequences depending on the nature and severity of the breach. The FMA Act includes provisions for accountability and financial management, and non-compliance could potentially lead to legal actions, fines, or other penalties as prescribed by the relevant legislation. The specifics of any penalties would need to be referred to within the broader context of the FMA Act and other related laws.