EXPLANATORY STATEMENT
Financial Management and Accountability Act 1997,
Section 31 Agreements for “Net Appropriations” Cancellation
The instrument to which this explanatory statement relates
This explanatory statement relates to an instrument made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act), entitled, “Financial Management and Accountability Net Appropriation Agreement Cancellation 2005” (the instrument).
The legislative authority under which the instrument is made
Section 31 of the FMA Act enables the Minister for Finance and Administration (the Finance Minister) to enter into agreements for the purposes of items in Appropriation Acts that are marked “net appropriation”.
Section 31 of the FMA Act, together with certain standard provisions of the annual Appropriation Acts, for example section 10 of Appropriation Act (No.1) 2005-2006, allows appropriation items to be increased by amounts received by an agency for items specified in the agreement.
Subsection 31(3) of the FMA Act provides that an agreement may be for any period, including a period longer than a financial year. An agreement need not relate to a particular Appropriation Act or Acts. Generally, agreements continue until circumstances require their renewal.
Subsection 31(4) of the FMA Act enables the Finance Minister to cancel or vary an agreement at any time without the consent of the other party.
Purpose and operation of the instrument
The instrument cancels all operative net appropriation agreements that commenced on or before 30 June 2004.
The Department of Finance and Administration, in consultation with all agencies subject to the FMA Act, has determined that no agency is currently relying on a net appropriation agreement that commenced on or before 30 June 2004. Consequently, there is no need for any such agreement to remain operational.
Section 52 of the Auditor-General Act 1997 provides that the Finance Minister must not cancel or vary a net appropriation agreement made with the Auditor-General, in respect of the Australian National Audit Office (ANAO), unless the Auditor-General consents. The instrument does not apply to a net appropriation agreement made in relation to the ANAO as its current net appropriation agreement was made on 29 June 2005.
Consultation
All FMA Act agencies have been consulted on the likely effect of the instrument. The Department of Finance and Administration has determined that no FMA Act agency is relying on any net appropriation agreement cancelled by the instrument.
The Australian Government Solicitor was consulted for technical advice on the instrument.
As the instrument is for internal machinery of government purposes only, no consultation, beyond that identified above, was considered necessary (see sections 17 and 18 of the Legislative Instruments Act 2003).
Additional Information
Agreements made under section 31 of the FMA Act are not subject to the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003: see item 19 in subsection 44(2) and item 17 in subsection 54(2) of the Legislative Instruments Act 2003.
Overview
The Financial Management and Accountability Act 1997 (FMA Act) was enacted to address the need for a robust framework governing financial management and accountability within the Australian government. This Act, enacted by the Parliament of Australia, seeks to ensure that public funds are managed efficiently and effectively, promoting transparency and accountability in the use of public resources. Section 31 of the FMA Act empowers the Minister for Finance and Administration to enter into agreements for items marked as "net appropriations" in Appropriation Acts, facilitating adjustments to appropriations based on specific conditions and enabling flexibility in financial management. The policy objective of the FMA Act is to uphold the integrity and effectiveness of financial practices within government agencies, thereby safeguarding public interest and ensuring responsible fiscal management.
Scope and Application
The Financial Management and Accountability Net Appropriation Agreement Cancellation 2005 applies to agreements made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act) for the purposes of items in Appropriation Acts that are marked "net appropriation." These agreements are intended to allow for the increase of appropriation items by amounts received by an agency for specified items within the agreement. The instrument cancels all operative net appropriation agreements that commenced on or before 30 June 2004. This cancellation applies to all relevant agencies subject to the FMA Act, with the exception of the Australian National Audit Office (ANAO), as the current net appropriation agreement related to the ANAO was made on 29 June 2005 and therefore is not affected by this instrument. The instrument does not extend to any other appropriation agreements or items outside the scope of net appropriations as defined under the FMA Act. Additionally, the instrument operates within the Commonwealth jurisdiction and does not extend to state or territory legislation or authorities.
Key Provisions
The Financial Management and Accountability Net Appropriation Agreement Cancellation 2005, made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act), cancels all agreements for “net appropriations” that began on or before 30 June 2004. Section 31 of the FMA Act enables the Minister for Finance and Administration to enter into these agreements for items in Appropriation Acts marked as “net appropriations,” with the ability to increase appropriation items by amounts received by an agency for specified items in the agreement (section 31(1)). These agreements can be for any period, including beyond a financial year, and do not need to relate to a particular Appropriation Act (section 31(3)). Additionally, the Finance Minister can cancel or vary these agreements at any time without requiring the consent of the other party (section 31(4)). The instrument specifically cancels agreements that began on or before 30 June 2004, as no agency subject to the FMA Act is currently relying on such agreements.
The obligations imposed by the FMA Act on parties entering into these agreements include ensuring that any increases in appropriation items are for specified items and are in accordance with the terms of the agreement. The agreements must be reviewed periodically to ensure they continue to meet the needs of the agencies involved. The Minister for Finance and Administration must also ensure that any cancellation or variation of an agreement is done in a manner that does not adversely affect the financial management and accountability of the relevant agencies.
The FMA Act does not specify particular offences or penalties for the breach of net appropriation agreements. However, any actions that result in a breach of the terms of these agreements could potentially lead to civil or administrative consequences, depending on the specific circumstances and the impact of the breach on the financial management and accountability of the relevant agencies. The instrument itself does not create new offences or penalties but ensures that outdated agreements are appropriately cancelled to maintain effective financial management practices.