EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Deregulation
Financial Management and Accountability Act 1997
Financial Management and Accountability (Establishment of Special Account for Department of Innovation, Industry, Science and Research) Determination 2011/09
Purpose of the Determination
The instrument is made under subsection 20 (1) of the Financial Management and Accountability Act 1997 (FMA Act) and establishes a Special Account entitled the Services for Other Entities and Trust Moneys - Department of Innovation, Industry, Science and Research 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 - Department of Innovation, Industry, Science and Research 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 this Determination
Reasons for establishing a new SOETM 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 the Department of Innovation, Industry, Science and Research to continue 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 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.
Clause 6 of the Determination specifies the purposes for which the Special Account can be debited.
- Subclauses 6 (a) and (b) describe the primary purposes for expenditure of amounts from the Special Account.
- Subclause 6 (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 6 (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
The Department of Innovation, Industry, Science and Research is the Agency affected by this determination and was provided with an opportunity to comment on a draft of this instrument and to supply data for the “Estimates of Transactions Table”. 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 Special Account
The table below outlines the estimated movement of appropriations within the Special Account.
| ($’000) |
Opening Balance | Credits(1) | Debits(2) | Closing Balance |
Services for Other Entities and Trust Moneys - Department of Innovation, Industry, Science and Research Special Account | 2010-2011 | 0 | 4,307 | 0 | 4,307 |
2011-2012 | 4,307 | 4,307 | 4,307 | 4,307 |
Note: these figures are estimates for the 2010-2011 and the 2011-12 Financial Years provided by the responsible Agency.
(1) Reflects the anticipated amounts credited to the Special Account.
(2) Reflects the anticipated amounts debited from the Special Account.
Overview
The Financial Management and Accountability (Establishment of Special Account for Department of Innovation, Industry, Science and Research) Determination 2011/09 was enacted to address the need for a dedicated account for handling miscellaneous funds on behalf of entities outside the Commonwealth. This determination was issued under the authority of the Minister for Finance and Deregulation, in accordance with subsection 20(1) of the Financial Management and Accountability Act 1997 (FMA Act). The primary objective of this determination is to establish a Special Account within the Department of Innovation, Industry, Science and Research, specifically named the Services for Other Entities and Trust Moneys - Department of Innovation, Industry, Science and Research Special Account. This Special Account is intended to facilitate the management and expenditure of funds that are received for services provided to non-Commonwealth entities, ensuring compliance with the constitutional requirement that all government revenues form part of the Consolidated Revenue Fund and can only be spent under parliamentary appropriation.
Scope and Application
The Financial Management and Accountability (Establishment of Special Account for Department of Innovation, Industry, Science and Research) Determination 2011/09 is a legislative instrument made under subsection 20(1) of the Financial Management and Accountability Act 1997 (FMA Act) to establish a new Special Account for the Department of Innovation, Industry, Science and Research. This Special Account, titled the Services for Other Entities and Trust Moneys - Department of Innovation, Industry, Science and Research Special Account, is designed to enable the Department to hold and expend amounts on behalf of entities other than the Commonwealth, particularly for services performed for or on behalf of non-government entities. The establishment of this account ensures that funds can be appropriately credited and debited in accordance with the purposes specified in the Determination, while maintaining compliance with the constitutional requirement that all government revenues form part of the Consolidated Revenue Fund and can only be spent pursuant to parliamentary appropriation. The Determination is subject to disallowance by either House of Parliament within five sitting days of tabling, but if not disallowed, it comes into effect on the day after the disallowance period ends.
The Special Account operates within the framework of the FMA Act, which governs financial management and accountability in Commonwealth agencies. The account allows the Department to debit and credit funds for specific purposes, including for services provided to other entities, trust monies, and other transactions permitted under section 28 of the FMA Act. The balance of the account can also be reduced without a payment occurring, ensuring that funds are not held indefinitely. The account is intended to streamline the handling of small, miscellaneous amounts that would otherwise be difficult to manage within the broader financial systems of the Department. The establishment of this account is intended to provide a clear framework for the management of these funds, ensuring transparency and compliance with financial management requirements.
Key Provisions
This determination, made under subsection 20(1) of the Financial Management and Accountability Act 1997 (FMA Act), establishes the Services for Other Entities and Trust Moneys - Department of Innovation, Industry, Science and Research Special Account. The Special Account is intended to allow the Department to hold and expend amounts on behalf of entities other than the Commonwealth, typically for miscellaneous small amounts, such as those received in connection with services performed for non-agency persons or entities (section 6). The determination specifies the purposes for which amounts may be debited from the account, including the primary purposes (subclause 6(a) and (b)), and also allows for the account to be debited in a manner otherwise permitted by section 28 of the FMA Act (subclause 6(c)), as well as to reduce the balance without a real or notional payment (subclause 6(d)).
The obligations under this Act include the establishment of the Special Account and the specification of the purposes for which amounts may be credited to or debited from it. The Department of Innovation, Industry, Science and Research, as the affected agency, is required to adhere to the provisions of the determination when handling transactions involving the Special Account. It must ensure that all credits and debits are aligned with the purposes specified in the determination, and it must provide accurate estimates of transactions for the relevant financial years (section 6 and note below section 6).
Breach of the provisions of this determination could result in legal consequences, although the specific nature of any penalties or sanctions is not detailed within the text of the determination itself. However, it is noted that the disallowance provisions under section 22 of the FMA Act apply to this determination, which means that either House of Parliament may disallow it within five sitting days of it being tabled. 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. This provision ensures that there is a level of parliamentary oversight over the establishment and operation of the Special Account.