EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Deregulation
Financial Management and Accountability Act 1997
Determination 2009/14 – Special Accounts Abolition 2009
Purposes of Determination 2009/14
The attached instrument makes a determination under section 20 of the Financial Management and Accountability Act 1997 (FMA Act) to abolish two Special Accounts for the Department of Defence – the Services for other Governments and Non-agency Bodies Account and the Other Trust Moneys 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 the purposes 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 the 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, such a determination is not subject to parliamentary disallowance.
Operation of the Determination 2009/14
Reasons for abolishing the Special Account
The abovementioned Special Accounts are being abolished by this instrument because, as part of a program to simplify the financial framework, the purposes of the separate Other Trust Moneys (OTM) and Services for other Governments and Non‑agency Bodies (SOG) Special Accounts are being combined within a single similar purpose Special Account – a Services for Other Entities and Trust Moneys (SOETM) Special Account – which is being established by Determination 2009/15. It is expected that the balances of the OTM and SOG Accounts will be transferred to the similar SOETM Special Account upon its creation, thereby making the abovementioned OTM and SOG Accounts redundant.
Effect of this determination
Each Special Account in Schedule 1 is abolished by this Determination from that time at which the balance of that Special Account reaches zero.
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 in the Special Accounts
| 2008-09 ($’000) |
| Opening Balance | Credits | Debits | Closing Balance |
Services for other Government and Non-agency Bodies Account | 58,402 | 84,394 | 142,796 | 0 |
Other Trust Moneys Account | 2,058 | 3,815 | 5,873 | 0 |
Overview
The Financial Management and Accountability Act 1997 Determination 2009/14, issued under the authority of the Minister for Finance and Deregulation, addresses the need to simplify the financial framework of the Commonwealth Government. This determination specifically aims to abolish two Special Accounts for the Department of Defence: the Services for other Governments and Non-agency Bodies Account, and the Other Trust Moneys Account. These accounts were established to manage specific funds within the Consolidated Revenue Fund, but are being phased out as part of a broader initiative to streamline financial management. The determination comes into effect as part of a larger program where the functions of these accounts are being consolidated into a new Services for Other Entities and Trust Moneys Special Account. This measure is designed to enhance the efficiency and clarity of financial operations within the Department of Defence, ensuring that funds are managed under a single, more cohesive structure. The determination was tabled in Parliament but, as it pertains to internal governmental mechanisms, no further consultation was deemed necessary.
Scope and Application
The Determination 2009/14, under section 20 of the Financial Management and Accountability Act 1997, mandates the abolition of two specific Special Accounts for the Department of Defence, namely the Services for other Governments and Non-agency Bodies Account and the Other Trust Moneys Account. This determination applies directly to the Department of Defence, the Commonwealth entity responsible for these accounts, and is executed by the Finance Minister, who is empowered to make such determinations without the requirement for parliamentary disallowance. The decision to abolish these accounts is part of a broader initiative to streamline the financial management framework within the Commonwealth Government, where these accounts will be replaced by a newly established Services for Other Entities and Trust Moneys (SOETM) Special Account. The geographic and jurisdictional scope of this determination is confined to the Commonwealth, with its impact felt within the financial operations of the Department of Defence. The determination does not extend to any other entities or accounts outside of those specified, and it does not apply to any other accounts or departments within the Commonwealth. This instrument is effective from the point at which the balances of the affected accounts reach zero, marking the cessation of these accounts' operation.
Key Provisions
The Determination 2009/14 (section 1) under the Financial Management and Accountability Act 1997 (FMA Act) abolishes two Special Accounts for the Department of Defence: the Services for Other Governments and Non-agency Bodies Account and the Other Trust Moneys Account. This action is part of a broader initiative to streamline the financial framework by consolidating the functions of these two accounts into a new Services for Other Entities and Trust Moneys (SOETM) Special Account, established by Determination 2009/15. The balances of the Services for Other Governments and Non-agency Bodies Account and the Other Trust Moneys Account are expected to be transferred to the new SOETM Special Account once it is established, rendering the former accounts redundant.
The obligations imposed by this Determination on the Department of Defence are primarily related to the management and transition of account balances. The Department must ensure that the balances in the Services for Other Governments and Non-agency Bodies Account and the Other Trust Moneys Account are accurately transferred to the new SOETM Special Account once it becomes operational. Additionally, the Department must manage the closure of these accounts once their balances reach zero, in accordance with the provisions of the Determination. The Department of Defence has already been provided with drafts of the instrument and agrees with its form.
There are no specific offences, penalties, or civil/criminal consequences outlined in the Determination 2009/14 for breaches of its provisions. However, the FMA Act, under which this Determination is made, provides a framework for financial management and accountability within the Commonwealth. The Act includes provisions for offences and penalties for mismanagement of public funds, which could apply if the transition process is not handled correctly. For example, section 24 of the FMA Act makes it an offence for a person to misuse public moneys, with penalties that could include fines and imprisonment. It is essential that the Department of Defence adheres to the requirements of the Determination to avoid any potential legal repercussions under the broader legislative framework.