EXPLANATORY STATEMENT
Financial Management and Accountability Act 1997, Section 31
Agreements for “Net Appropriations”
The instrument to which this explanatory statement relates
This explanatory statement relates to an instrument (the instrument) made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act), which is entitled Financial Management and Accountability Net Appropriation Agreement: Department of Finance and Administration – Administered Expenses Cancellation, commencing
26 September 2005.
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 with other Ministers 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) 2004-2005), allows departmental (and in select cases, administered) appropriation items to be increased by amounts received by an agency as specified in the agreement.
Subsection 31(3) of the FMA Act provides that an agreement may be for any period (that is, it need not relate to a particular Appropriation Act or Acts), including a period longer than a financial year. 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
On 26 September 2005, the Department of Finance and Administration cancelled the Net Appropriation Agreement for the Department of Finance and Administration (Administered Expenses: Outcomes 3), commencing 29 June 2005, prior to its registration on the Federal Register of Legislative Instruments.
Notes on the instrument
Specific provisions within the annual Appropriation Acts give effect to the instrument. Therefore, the instrument only has effect while the relevant specific provisions exist in the annual Appropriation Acts.
Consultation
The Department of Finance and Administration is the agency affected by this instrument. The agency was consulted in the drafting 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).
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 improved financial management and accountability within the Australian government. This Act provides the legal framework for the efficient and effective use of public funds, ensuring that the government's financial resources are managed in a way that is transparent, accountable, and in accordance with the law. Section 31 of the FMA Act specifically enables the Minister for Finance and Administration to enter into agreements with other Ministers concerning items in Appropriation Acts that are marked as “net appropriations”. This allows for the flexibility to adjust departmental and administered appropriations based on amounts received by an agency, as specified in the agreement. The policy objective is to facilitate better financial management by allowing for the reallocation of funds in response to changing circumstances or additional revenue.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) applies to the Minister for Finance and Administration and other Ministers in the Commonwealth of Australia, enabling the formation of agreements regarding appropriations marked as "net appropriation" in Appropriation Acts. The Act allows for the increase of departmental and certain administered appropriation items by amounts received by an agency, as specified in the agreement, with such agreements not limited to a particular Appropriation Act or financial year. The Minister for Finance and Administration has the authority to cancel or vary these agreements at any time without the consent of the other party. The instrument, which relates to a specific cancellation of a Net Appropriation Agreement for the Department of Finance and Administration, only has effect while the relevant provisions exist in the annual Appropriation Acts and was drafted with consultation from the affected department. Notably, these agreements are exempt from parliamentary disallowance and sunsetting provisions under the Legislative Instruments Act 2003.
Key Provisions
Section 31 of the Financial Management and Accountability Act 1997 (FMA Act) allows the Minister for Finance and Administration to enter into agreements with other Ministers regarding items in Appropriation Acts that are marked as "net appropriations." These agreements, as detailed in the instrument, can cover any period and do not need to be tied to a specific Appropriation Act or financial year. The agreement in question pertains to the Department of Finance and Administration's administered expenses cancellation, which took effect on 26 September 2005. It cancels a previously established net appropriation agreement that was set to commence on 29 June 2005, prior to its registration on the Federal Register of Legislative Instruments.
The obligations under these agreements typically involve the specified appropriation items being increased by the amounts received by the agency, as outlined in the agreement. This is facilitated by certain standard provisions within the annual Appropriation Acts, such as section 10 of the Appropriation Act (No. 1) 2004-2005. The Finance Minister has the authority to cancel or vary these agreements at any time without needing the consent of the other party, as stated in subsection 31(4) of the FMA Act. Such agreements continue in effect until circumstances necessitate their renewal or cancellation.
The legal consequences for non-compliance with the provisions of the FMA Act and the specific agreements made under it are not explicitly detailed in the explanatory statement. However, the cancellation of the agreement itself does not appear to carry immediate penalties or consequences as per the provided text. Instead, the focus is on the administrative adjustments to the appropriations and the internal machinery of government processes. The instrument is internal and does not require broader consultation beyond the affected agency, as it pertains to the internal operations of government departments.