Overview

The Financial Management and Accountability Act 1997 (FMA Act) was enacted by the Parliament of Australia to establish a framework for financial management and accountability within the Commonwealth government. This legislation, along with the 2009/10 Determination made under section 20 of the FMA Act, aims to address the need for varied and specific management of government funds through the establishment and subsequent abolition of the Defence Endowments Account. The primary objective of this Determination, as stated in the Explanatory Statement issued by the Minister for Finance and Deregulation, is to facilitate the transfer of the Defence Endowments Account's balance to a newly established Defence Endowments Special Account, thereby enabling necessary changes to the account's operations. This change was necessitated by structural constraints in the original account's determination, which could not be effectively modified. The process ensures compliance with constitutional requirements and parliamentary oversight, as outlined in section 22 of the FMA Act, which mandates the tabling of the determination in both Houses of Parliament and allows for a disallowance period. Once the balance of the Defence Endowments Account reaches zero, clause 4 of the Determination will result in the abolition of the account.

Scope and Application

The Financial Management and Accountability Act 1997 Determination 2009/10, issued under the authority of the Minister for Finance and Deregulation, pertains to the modification and subsequent abolition of the Defence Endowments Account. This Act applies to the Defence Endowments Account, a special account established to manage funds for specific purposes outlined in the Act. The Determination is applicable within the Commonwealth of Australia, impacting entities and transactions associated with the Defence Endowments Account. The amendment is necessitated by structural constraints in the initial determination establishing the account, which made it impractical to implement the necessary changes. Instead, a new Defence Endowments Special Account will be established to continue the account's activities and incorporate the required modifications. The new account will absorb the existing balance of the Defence Endowments Account once it reaches zero, effectively abolishing the original account. The instrument was developed in consultation with the Department of Defence, which was provided with drafts and agrees with the form of the instrument. No further consultation was deemed necessary as the instrument is intended for internal machinery of government purposes only.

Key Provisions

The Determination 2009/10 to vary and abolish the Defence Endowments Account, as per section 20 of the Financial Management and Accountability Act 1997 (FMA Act), introduces a new Special Account to replace the existing Defence Endowments Account. This new account, termed the Defence Endowments Special Account, is established to incorporate necessary changes that were not feasible under the existing structure of the Defence Endowments Account. The existing Defence Endowments Account will have its balance transferred to the new account and will be abolished once its balance reaches zero, as outlined in clause 4 of the Determination. The obligations imposed by this Determination on the relevant parties primarily include ensuring the smooth transition of funds from the Defence Endowments Account to the new Defence Endowments Special Account. The Department of Defence, as the affected agency, must cooperate with the transition process and ensure that the activities governed by the old account are continued under the new framework. The Finance Minister, in establishing the new account, must also adhere to the requirements of tabling the establishing determination in each House of Parliament, as per section 22 of the FMA Act. The disallowance provisions allow either House of Parliament to disallow the determination within five sitting days of tabling, which if not exercised, allows the Determination to come into effect after the disallowance period. Failure to comply with the provisions of this Determination could lead to administrative inefficiencies and potential legal challenges regarding the proper use of public funds. However, the Determination itself does not explicitly outline specific offences or penalties for breaches. The overarching framework of the FMA Act and other relevant financial management regulations would apply, potentially leading to financial mismanagement charges or other administrative penalties. The exact penalties would depend on the nature and extent of the breach, but could include fines and other administrative sanctions as prescribed by the relevant legislation.