EXPLANATORY STATEMENT

Issued by the authority of the Minister for Finance and Administration

Financial Management and Accountability Act 1997

Determination 2006/66 to establish a Special Account

Purposes of Determination 2006/66

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, Intellectual Property 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 Intellectual Property Special 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 such a determination.

Operation of Determination 2006/66

Purpose of the Intellectual Property Special Account

This Determination is required in order to establish a Special Account to enable the proper collection of moneys from intellectual property rights holders, and other sources, in accordance with the relevant intellectual property rights legislation.  Expenditures relating to the administration of registrable intellectual property rights within Australia (including patents, trade marks, designs and plant breeders’ rights) will be made from the Special Account.  Plant breeders’ rights are a form of intellectual property, like patents and copyright, and relate to exclusive commercial rights to a registered variety.

As the agency responsible for the administration of registrable intellectual property rights, IP Australia operates predominantly from receipts received from rights holders.  However there are receipts from other sources (including a small appropriation from government).

Reasons for establishing a new Special Account

The Intellectual Property Special Account is required in order to give effect to changes that are required to the existing IP Australia Account (‘the old Account’), but which it is not practical to make by variation to the old Account, due to the way in which the Initial Determination was structured.  Upon commencement of the FMA Act on 1 January 1998, the old Account was established as a component of the Reserved Money Fund (RMF) in the Initial Determination.  The Financial Management Legislation Amendment Act 1999, which varied the FMA Act, converted the component of the RMF into a Special Account.

The current purposes of the old Account are:

(1)                      For expenditure related to the development and administration of intellectual and industrial property systems, including the provision of property rights in inventions, trademarks and designs, and matters incidental thereto; and

(2)                      For expenditure comprising notional payments of moneys to the Official Public Account, as agreed from time to time by the Minister for Finance and Administration and the relevant Minister.

Changes Required

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

• a change in the Special Account’s name from the IP Australia Account to the Intellectual Property Special Account, in order to avoid referring specifically to the body.

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.

Limitations in the structure of the Initial Determination

It is not practical to vary the Initial Determination signed by the delegate of the Minister for Finance and Administration 31 December 1997 (establishing an IP Australia Reserve as a component of the Reserved Money Fund).  This is because the format of the determination constrains the amount of information that can be included.  Accordingly, a new Account is being established (Determination 2006/66) to provide for the continuation of the activities of the old Account, the incorporation of the necessary changes, and to ensure that the determination is as clear and informative as possible.

Consultation

IP Australia 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).

Estimates of transactions on the Intellectual Property Special Account

1. Includes balance debited from the old Account and credited to the new Intellectual Property Special Account.