EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Deregulation
Financial Management and Accountability Act 1997
Determination 2009/12 to vary and abolish a Special Account
Purposes of Determination 2009/12
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 Fedorczenko Legacy Fund 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 may be 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 2009/12
Reasons for varying the Special Account
The current purpose of the Fedorczenko Legacy Fund Account is for expenditure in relation to the defence of Australia of the residue of estate of the late Petro Fedorczenko.
A new Special Account, entitled the Fedorczenko Legacy Fund Special Account (the new Account), is required in order to give effect to changes that are required to the Fedorczenko Legacy Fund Account, but which are not practical to make by variation to the Fedorczenko Legacy Fund Account due to the way in which the Initial Determination to Establish Components of the Reserved Money Fund (the Initial Determination) was structured.
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 on 31 December 1997 (establishing a Fedorczenko Legacy Fund 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 2009/13) 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.
Effect of this Determination
The Fedorczenko Legacy Fund Account is being varied by this Determination to enable its balance to be credited to the new Account. Once the balance of the Fedorczenko Legacy Fund Account reaches zero, clause 4 of the Determination will abolish the Fedorczenko Legacy Fund Account.
Consultation
The Department of Defence 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 Fedorczenko Legacy Fund Account
| Opening Balance 2008-09 $’000 | Credits 2008-09 $’000 | Debits 2008-09 (1) $’000 | Closing Balance 2008-09 $’000 |
Fedorczenko Legacy Fund Account | 156 | 0 | 156 | 0 |
1. Includes balance to be debited from the Fedorczenko Legacy Fund Account and credited to the new Account.
Overview
The Financial Management and Accountability Act 1997 (FMA Act) is central to the management of Commonwealth finances, governing the use of public funds through various mechanisms including Special Accounts. Enacted by the Australian Parliament, the FMA Act aims to ensure that all Commonwealth moneys are spent in accordance with parliamentary appropriation and that public funds are managed with transparency and accountability. Determination 2009/12, issued under the authority of the Minister for Finance and Deregulation, seeks to address a specific issue concerning the Fedorczenko Legacy Fund Account, which was established to manage the residue of the estate of the late Petro Fedorczenko for the defence of Australia. Due to structural limitations in the original determination that established this account, it has become impractical to vary it directly. Consequently, this Determination varies the existing Fedorczenko Legacy Fund Account to facilitate the transfer of its balance to a newly established Fedorczenko Legacy Fund Special Account, which will incorporate the necessary changes and ensure clarity in its operation. This change will eventually lead to the abolition of the Fedorczenko Legacy Fund Account once its balance reaches zero.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) Determination 2009/12 pertains to the variation and subsequent abolition of the Fedorczenko Legacy Fund Account, a special account established under the FMA Act. This Determination applies to the Fedorczenko Legacy Fund Account and its subsequent transfer to a newly established Fedorczenko Legacy Fund Special Account, which will continue to serve the purpose of expenditure in relation to the defence of Australia for the residue of the late Petro Fedorczenko's estate. The Determination is applicable to the Commonwealth Government and specifically affects the Department of Defence, which is the agency concerned with this instrument. The Determination operates within the Commonwealth jurisdiction and is structured to ensure compliance with the Financial Management and Accountability Act 1997. While the Determination involves variations and eventual abolition of a special account, there are no exclusions or exemptions specified within the document, and it does not establish any new thresholds. The operation of the Determination is supported by the legislative framework that allows for the creation and alteration of special accounts, subject to parliamentary disallowance as per section 22 of the FMA Act. The process of disallowance is preserved by Regulation 10 of the Legislative Instruments Regulations 2004, which exempts special account determinations from certain provisions of the Legislative Instruments Act 2003.
Key Provisions
The Determination 2009/12 under the Financial Management and Accountability Act 1997 (FMA Act) serves to vary and ultimately abolish the Fedorczenko Legacy Fund Account (section 20). This determination is necessitated by structural limitations in the Initial Determination that established the Fedorczenko Legacy Fund Reserve as a component of the Reserved Money Fund. The Fedorczenko Legacy Fund Account is currently intended for expenditure related to the defence of Australia using the estate residue of the late Petro Fedorczenko. The determination introduces a new Special Account, the Fedorczenko Legacy Fund Special Account, to accommodate necessary changes that cannot be efficiently implemented by varying the existing account due to the constraints in the Initial Determination.
The obligations imposed by this Act on the relevant parties include the establishment and management of the Fedorczenko Legacy Fund Special Account in accordance with the terms set out in the Determination. The Finance Minister must ensure that the new account facilitates the intended expenditure and adheres to the legislative requirements for Special Accounts. The Department of Defence, as the affected agency, must cooperate with the transition from the Fedorczenko Legacy Fund Account to the new Special Account, ensuring that all transactions are accurately recorded and comply with the provisions of the FMA Act. Additionally, the Finance Minister must table a copy of the determination in each House of Parliament, and either House may disallow the determination within five sitting days of tabling.
Failure to comply with the provisions of the FMA Act and the Determination may result in legal consequences. While the explanatory statement does not detail specific offences or penalties, breaches of financial management regulations can generally lead to civil or criminal penalties, depending on the nature and severity of the breach. For instance, under the Public Governance, Performance and Accountability Act 2013, officials may face disciplinary action, including dismissal, and in serious cases, criminal charges. The potential penalties for non-compliance can include fines and imprisonment, although the exact penalties would depend on the specific breach and the applicable legislation. The overarching aim is to ensure the integrity and accountability of financial management practices within the Commonwealth.