EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Administration
Financial Management and Accountability Act 1997
Determination 2007/05 to vary and abolish a Special Account
Purposes of Determination 2007/05
The attached instrument makes a determination under section 20 of the Financial Management and Accountability Act 1997 (FMA Act) to vary and subsequently abolish the PSS Special Account. This instrument varies the determination entitled Determination by the Minister for Finance and Administration under section 20 of the Financial Management and Accountability Act 1997 made on 14 June 2002, that established the PSS 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 the Determination 2007/05
Reasons for varying the Special Account
The PSS Special Account currently enables the administration and management of two of the Australian Government’s civilian superannuation schemes, the Public Sector Superannuation Scheme (PSS) and the Public Sector Superannuation Accumulation Plan (PSSAP).
The Financial Management and Accountability Determination 2007/04 — Australian Reward Investment Alliance Special Account will establish a single Special Account for the Australian Reward Investment Alliance, to replace the two existing Special Accounts which currently enable the administration and management of the three Australian Government civilian superannuation schemes: the Commonwealth Superannuation Scheme (CSS), the PSS and the PSSAP.
The new Special Account for ARIA is also required to reflect the fact that instead of three prescribed agencies administering these schemes (the CSS Board, the PSS Board, and ComSuper), there will be only two: ARIA, and ComSuper.
Once the new ARIA Special Account has been established, it will no longer be necessary to credit amounts to the PSS Special Account. Accordingly, this variation removes the crediting clauses from the Special Account. Once the balance of the PSS Special Account reaches zero, it will no longer be required and clause 4 will abolish it.
Changes required
The crediting clauses of the Special Account have been omitted from the Determination.
Effect of this determination
The PSS Special Account is being varied by this determination (Determination 2007/05) to prevent further amounts being credited to the Special Account. Once the balance of the PSS Special Account reaches zero, clause 4 of the determination will abolish the PSS Special Account.
Consultation
ComSuper and ARIA are the agencies affected by this instrument, and were provided with drafts of the instrument and agree with its form. 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 PSS Special Account
| Opening Balance 2006-07 $’000 | Credits 2006-07 $’000 | Debits 2006-07 $’000 | Closing Balance 2006-07 $’000 |
PSS Special Account | 986 | 17,555 | 15,926 | 2,615 |
Overview
The Financial Management and Accountability Act 1997 (FMA Act) was enacted to provide a framework for the management of Commonwealth finances, ensuring accountability and transparency in the use of public funds. This Act established the basis for creating Special Accounts, which allow specific amounts from the Consolidated Revenue Fund to be allocated for particular purposes. The Act is administered by the Parliament of Australia, which has the authority to appropriate funds and oversee financial management within the Commonwealth. The policy objective of the FMA Act is to ensure that public money is managed responsibly and efficiently, with clear accountability for its use. In 2007, a determination was made to vary and subsequently abolish the PSS Special Account, which had been established to manage two civilian superannuation schemes. This change was necessitated by the introduction of a new Special Account for the Australian Reward Investment Alliance, which consolidated the administration of several superannuation schemes under a single account. The variation of the PSS Special Account aimed to align the financial management structure with the new administrative arrangements, ensuring that funds are correctly allocated and managed in accordance with the FMA Act.
Scope and Application
The Financial Management and Accountability Determination 2007/05, issued under section 20 of the Financial Management and Accountability Act 1997, pertains to the variation and subsequent abolition of the PSS Special Account, which was previously established by a 2002 determination. This special account was used for the administration and management of the Public Sector Superannuation Scheme (PSS) and the Public Sector Superannuation Accumulation Plan (PSSAP). The variation and abolition of this special account align with the creation of a new Australian Reward Investment Alliance Special Account, which consolidates the management of the three Australian Government civilian superannuation schemes under one account. The determination stops further credits to the PSS Special Account and abolishes it once its balance reaches zero, reflecting the consolidation of superannuation scheme administration. The determination is subject to disallowance by either House of Parliament within five sitting days of tabling, as required by section 22 of the FMA Act, although the abolition of the account does not require tabling.
This instrument applies to the Finance Minister and the agencies affected by the changes, specifically ComSuper and ARIA. It operates within the Commonwealth jurisdiction, aligning with the financial management practices of the Australian Government. The determination does not require broader consultation beyond the affected agencies, as it pertains to internal machinery of government purposes. The changes mandated by the determination are in response to structural changes in the administration of government superannuation schemes, aiming to streamline financial management and accountability processes.
Key Provisions
The Determination 2007/05 (section 20 of the Financial Management and Accountability Act 1997) modifies the PSS Special Account, which previously enabled the administration and management of the Public Sector Superannuation Scheme (PSS) and the Public Sector Superannuation Accumulation Plan (PSSAP). This alteration is intended to prevent further crediting to the PSS Special Account, thereby aligning with the creation of a new Special Account for the Australian Reward Investment Alliance (ARIA) through Determination 2007/04. Once the balance of the PSS Special Account reaches zero, the account will be abolished (section 4 of the determination).
Entities governed by the Act, particularly ComSuper and ARIA, must comply with the crediting clauses being omitted from the PSS Special Account as stipulated by the Determination 2007/05. This means that these entities must cease crediting amounts to the PSS Special Account and ensure the account balance reaches zero, following which the account will be abolished. The Finance Minister is required to table the varying determination in each House of Parliament, and it may be disallowed by either House within five sitting days (section 22 of the FMA Act). If not disallowed, the determination takes effect after this period.
Failure to comply with the requirements of the Act and the determinations could result in civil or criminal consequences. However, the explanatory statement does not specify any particular offences, penalties, or consequences for breach of the Determination 2007/05. It is understood that adherence to the Act's provisions is necessary to maintain financial integrity and accountability within the government's financial management framework.