EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Deregulation
Financial Management and Accountability Act 1997
Determination 2009/18 to establish a Special Account
Purposes of Determination 2009/18
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 Services for Other Entities and Trust Moneys – Medicare Australia 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 Services for Other Entities and Trust Moneys – Medicare Australia 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 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 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 2009/18
Reasons for establishing a new Special Account
Most agencies under the FMA Act administer either a Services for Other Entities and Trust Moneys (SOETM) Special Account or other Special Accounts that together encompass the purposes of a SOETM Special Account.
The SOETM Special Account will enable Medicare Australia to hold and expend amounts on behalf of persons or entities other than the Commonwealth.
Typically, the SOETM Special Account will be used to accommodate small amounts of miscellaneous moneys. For example, the SOETM Special Account may be used to hold amounts (a) received in connection with services performed for or on behalf of any persons or entities that are not Agencies as prescribed under the FMA Act, such as other governments; and (b) received from Comcare in relation to employees entitled to receive workers’ compensation payments.
Clause 5 of the Determination specifies the purposes for which the Special Account can be debited.
- Subclauses 5 (a) and (b) describe the primary purposes for expenditure of amounts from the Special Account.
- Subclause 5 (c) allows the Special Account to the 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.
- Subclause 5 (d) allows the balance of the Special Account to be reduced without a real or notional payment occurring. It is included to ensure that these amounts are not set aside indefinitely.
Consultation
Medicare Australia 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 Services for Other Entities and Trust Moneys – Medicare Australia Special Account
| 2009-10 ($’000) |
| Opening Balance | Credits (1) | Debits | Closing Balance |
Services for Other Entities and Trust Moneys – Medicare Australia Special Account | 0 | 216 | 98 | 118 |
1. Includes balance to be debited from the Other Trust Moneys – Medicare Australia Special Account and credited to the new Account.
Overview
The Financial Management and Accountability Act 1997 (FMA Act) was enacted to ensure that the Commonwealth's financial management practices are transparent, accountable, and comply with established standards. This Act, administered by the Parliament of Australia, aims to provide a framework for the effective management of public finances, ensuring that public funds are used efficiently, economically, and in accordance with the law. One aspect of this framework is the establishment of Special Accounts, which allow for the segregation and specific allocation of funds within the Consolidated Revenue Fund (CRF) for particular purposes. Determination 2009/18 under the FMA Act was introduced to establish a Services for Other Entities and Trust Moneys – Medicare Australia Special Account to address the need for a dedicated account to manage miscellaneous moneys received on behalf of entities other than the Commonwealth. This special account facilitates the handling and expenditure of small amounts of money, such as those received from services performed for other governments or related to workers’ compensation payments, ensuring these transactions are managed in a manner that is both efficient and compliant with financial management regulations.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) provides the legislative framework under which the Special Account is established. This legislation applies to the Commonwealth Government, specifically to the Minister for Finance and Deregulation, who is responsible for making determinations that establish or vary Special Accounts. The establishment of the Services for Other Entities and Trust Moneys – Medicare Australia Special Account is pursuant to subsection 20(1) of the FMA Act, which allows for the creation of Special Accounts to manage specific financial transactions. These accounts are supported by an appropriation and are subject to parliamentary oversight as per section 22 of the FMA Act, which requires tabling of the determination in both Houses of Parliament, with a disallowance period of five sitting days. The geographic reach of this Act is national, as it pertains to the Commonwealth Government’s financial management practices. The Special Account is specifically tailored to accommodate transactions that involve holding and expending moneys on behalf of persons or entities other than the Commonwealth, such as other governments and workers' compensation payments, thereby ensuring these funds are appropriately managed and accounted for within the Consolidated Revenue Fund.
Key Provisions
Determination 2009/18 under the Financial Management and Accountability Act 1997 establishes a Special Account known as the Services for Other Entities and Trust Moneys – Medicare Australia Special Account. This account is intended to manage funds received on behalf of entities other than the Commonwealth. According to section 20(1) of the FMA Act, this Special Account is supported by an appropriation and allows the expenditure of funds from the Consolidated Revenue Fund for specified purposes. The purposes for which amounts can be debited from the account are outlined in clause 5 of the Determination, including the holding of small amounts of miscellaneous moneys received in connection with services performed for non-government entities and workers’ compensation payments.
The obligations imposed by this Determination on the parties governed include the requirement for Medicare Australia to adhere to the specified purposes for crediting and debiting the account. It mandates that the account must be used only for the purposes outlined in clause 5, such as holding funds received for services performed for non-Commonwealth entities or workers' compensation payments. Furthermore, the Finance Minister is obligated to table a copy of the Determination in each House of Parliament as required by section 22 of the FMA Act. If not disallowed within five sitting days, the Determination comes into effect on the day after the last day it could have been disallowed.
Failure to comply with the provisions of this Determination may lead to civil or criminal consequences. While the specific offences and penalties are not detailed in the Determination itself, breaches of the FMA Act can generally result in penalties under relevant sections of the Act. These may include fines, imprisonment, or both, depending on the severity and nature of the breach. The exact penalties are typically outlined in the FMA Act and other related legislation. The disallowance process under section 22 of the FMA Act provides a mechanism for Parliament to review and potentially invalidate the Determination if it deems it necessary.