EXPLANATORY STATEMENT

Issued by the authority of the Minister for Finance and Deregulation

Financial Management and Accountability Act 1997

Determination 2010/05 to establish a Special Account

Purposes of Determination 2010/05

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 Superannuation Clearing House 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 Superannuation Clearing House 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 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 Determination 2010/05

Purpose of the Superannuation Clearing House Special Account

The Determination will establish a Special Account for the administration of the Superannuation Clearing House.  Medicare Australia will acquire the function of administering the Superannuation Clearing House under section 7 of the Medicare Australia Act 1973, subject to the Chief Executive Officer of Medicare Australia entering into a service arrangement with the Secretary of the Treasury, with the written approval of the Minister for Human Services.

The purpose of this Special Account is to hold amounts received from small business employers to make superannuation contributions for the benefit of their employees.  After receiving the amounts, Medicare Australia, in administering the Superannuation Clearing House, will pay the amounts to nominated superannuation funds on behalf of the employers.

Subclause 5 (1) specifies the purposes for which amounts may be debited from the Special Account.

• Paragraph 5 (1) (a) describes the primary purposes for which expenditure can be made from the Special Account.
• Paragraph 5 (1) (b) allows amounts credited to the Special Account to be repaid to the original payer, including the residual after necessary payments are made under paragraph 5 (1) (a).
• Paragraph 5 (1) (c) allows the balance of the Special Account to be reduced without a real or notional payment occurring.  It is included to ensure that amounts held in the Special Account are not set aside indefinitely.
• Paragraph 5 (1) (d) 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

Medicare Australia and the Department of the Treasury are the agencies affected by this instrument.  The agencies were provided with drafts of the instrument and agree 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).