EXPLANATORY STATEMENT

Issued by the authority of the Minister for Finance and Administration

Financial Management and Accountability Act 1997

Determination 2007/21 to establish a Special Account

Purposes of Determination 2007/21

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 the Northern Territory Flexible Funding Pool 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 Northern Territory Flexible Funding Pool 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 2007/21

Purpose of the Northern Territory Flexible Funding Pool Special Account.

This determination will establish a Special Account – which will be administered by the Department of Families, Community Services and Indigenous Affairs (FACSIA) – to develop, promote, assist or implement employment creation initiatives in relation to the Northern Territory Emergency Response.

Reasons for establishing a new Special Account

To develop, promote, assist or implement employment creation initiatives related to the Northern Territory Emergency Response the Government has determined that FACSIA will oversight a single funding pool for resourcing employment initiatives delivered by a number of Commonwealth agencies. The Special Account will be funded by a single appropriation to the lead agency which will encompass the nominated employment creation initiatives. Additionally, other appropriations for existing initiatives could be credited to the Special Account. Funds will be nominally allocated within the Flexible Funding Pool to individual employment initiatives. Payments will be released by FACSIA to agencies on an as needed basis in order to meet agreed outcomes.

Clause 5(1) specifies the purposes for which the Special Account can be debited.

• Paragraphs 5(1)(a) describes the primary purposes for which expenditure can be made from the Special Account.
• Paragraph 5(1)(b) allows the balance of the Special Account to be reduced without a notional or real payment occurring.
• 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

FACSIA is the agency affected by this instrument, and was provided with drafts of the instrument and agrees 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 Northern Territory Flexible Funding Pool Special Account