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).
Overview
The Financial Management and Accountability Act 1997 was enacted to provide a framework for the management and accountability of Commonwealth financial resources. This Act aims to ensure that all government revenues and expenditures are handled according to established procedures and oversight mechanisms. One of the mechanisms introduced under this Act is the establishment of Special Accounts, which are used to segregate certain funds for specific purposes. The 2010 determination, F2010L01238, was introduced by the Minister for Finance and Deregulation to establish a Special Account known as the Superannuation Clearing House Special Account. This account was created to facilitate the administration of superannuation contributions by small business employers on behalf of their employees, with Medicare Australia taking on the role of administering the Superannuation Clearing House. The establishment of this Special Account aims to streamline the process of transferring superannuation funds from employers to nominated superannuation funds, ensuring that the money is appropriately credited and debited as per the outlined purposes. The enactment of this determination adheres to the requirements set out in the Financial Management and Accountability Act, ensuring that it is subject to parliamentary oversight and disallowance procedures.
Scope and Application
The Determination 2010/05, made under the Financial Management and Accountability Act 1997, establishes a Special Account named the Superannuation Clearing House Special Account. This Special Account is specifically designed to facilitate the administration of the Superannuation Clearing House, a function to be undertaken by Medicare Australia. The establishment of this Special Account allows for the receipt and disbursement of funds related to superannuation contributions made by small business employers on behalf of their employees. The amounts credited to the Special Account can only be used for specified purposes, including making payments to nominated superannuation funds and repaying any excess funds to the original payers. The Special Account is subject to appropriation under the Financial Management and Accountability Act and its establishment requires tabling in Parliament, with a disallowance period of five sitting days. Additionally, the account can be abolished by a determination of the Finance Minister, although such a determination is not subject to disallowance. This Special Account operates within the framework of the Commonwealth and applies to the agencies directly involved in its administration, namely Medicare Australia and the Department of the Treasury.
Key Provisions
The Financial Management and Accountability Act 1997 (FMA Act) includes provisions for the establishment of Special Accounts through determinations by the Minister for Finance and Deregulation. Section 20(1) of the FMA Act allows for the establishment of these Special Accounts, which are part of the Consolidated Revenue Fund (CRF), but can only be spent in accordance with an appropriation made by Parliament for specific purposes. Determination 2010/05, therefore, establishes a Special Account called the Superannuation Clearing House Special Account (subsection 5(1)). This account is designed to facilitate the administration of superannuation contributions made by small business employers for their employees. Specifically, subsection 5(1) outlines the purposes for which amounts can be debited from the account, such as making payments to nominated superannuation funds (subsection 5(1)(a)) or repaying any excess funds to the original payer (subsection 5(1)(b)).
The obligations imposed by this Determination on the parties involved are primarily administrative and financial. Medicare Australia, which will administer the Superannuation Clearing House, must enter into a service arrangement with the Secretary of the Treasury, subject to the written approval of the Minister for Human Services (subsection 7). This arrangement ensures that the administration of the Superannuation Clearing House is conducted efficiently and in compliance with the objectives outlined in the Determination. Furthermore, the Finance Minister is required to table a copy of this determination in each House of Parliament, allowing for parliamentary oversight and the possibility of disallowance within five sitting days (section 22). If not disallowed, the determination takes effect on the day after the last possible day for disallowance.
Breaching the provisions of this Determination can have legal consequences, though the Determination itself does not explicitly state penalties. However, under the general provisions of the FMA Act, any misuse or unauthorised expenditure from the Special Account could result in civil or criminal penalties. For example, section 30 of the FMA Act provides for penalties in the case of misuse of public money, which could include fines and imprisonment depending on the severity of the breach. The maximum penalties would be determined in accordance with other relevant legislation, such as the Crimes Act 1914, which outlines general criminal penalties in Australia.