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 for the Office of Workplace Services, commencing on 27 June 2006
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
The net appropriation agreement relating to the Office of Workplace Services, made pursuant to section 31 of the Financial Management and Accountability Act 1997, is cancelled. The instrument is given effect by the annual appropriation Acts, which provide that the relevant departmental or administered appropriation item is increased in accordance with the agreement. This enables the receipts to be spent by the Office of Workplace Services.
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 Office of Workplace Services 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 was enacted to establish a robust framework for the financial management and accountability of Commonwealth entities, ensuring that public funds are utilised efficiently, effectively, and in compliance with relevant laws and regulations. This Act addresses the need for clear guidelines and accountability mechanisms in the management of financial resources within the federal government, aiming to enhance transparency and financial integrity across all Commonwealth agencies. The Australian Parliament enacted the Act to provide a legislative basis for the sound management of public finances and to ensure that public money is used responsibly and in accordance with the law. The Act's policy objective is to promote prudent financial management practices and to hold entities accountable for their financial decisions and resource allocations.
Scope and Application
The Financial Management and Accountability Net Appropriation Agreement for the Office of Workplace Services, made under section 31 of the Financial Management and Accountability Act 1997, applies specifically to the Office of Workplace Services, which is the agency that is affected by this agreement. The purpose of this agreement is to enable the Office of Workplace Services to increase its departmental or administered appropriation items by the amounts received by the agency as specified in the agreement, allowing these receipts to be spent accordingly. This agreement, which commenced on 27 June 2006, allows for the appropriation items to be adjusted in line with the agreement, and these adjustments are given effect through the annual appropriation Acts, provided that the specific provisions within these Acts continue to exist. The agreement can cover any period, including periods longer than a financial year, and can be cancelled or varied by the Minister for Finance and Administration at any time without the need for consent from the other party. It is worth noting that this agreement is exempt from the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003.
Key Provisions
The main operative sections of the instrument, made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act), pertain to the cancellation of a net appropriation agreement for the Office of Workplace Services. The agreement, which was initially intended to facilitate the increase of departmental appropriation items based on specified receipts, is no longer in effect as per this instrument. This cancellation means that the provisions in the annual appropriation Acts that were meant to give effect to the agreement are now nullified. The cancellation is effective from the date specified in the instrument, which is 27 June 2006.
The obligations and requirements imposed by this Act primarily revolve around the process of entering into and managing net appropriation agreements. Under section 31 of the FMA Act, the Minister for Finance and Administration has the authority to enter into these agreements with other Ministers to adjust appropriation items based on the specific receipts of an agency. These agreements can be for any duration and can be varied or cancelled at any time by the Minister for Finance and Administration without the need for consent from the other party. The Office of Workplace Services, as the affected agency, was consulted during the drafting of this instrument, ensuring that the agency's interests and operational needs were considered in the cancellation of the agreement.
In terms of consequences and penalties, the explanatory statement does not explicitly detail any criminal or civil penalties for breach of the net appropriation agreements. However, the cancellation of the agreement under section 31(4) of the FMA Act indicates that the Minister for Finance and Administration retains the power to manage and alter these agreements as necessary. The lack of parliamentary disallowance and sunsetting provisions for these agreements, as noted in the Legislative Instruments Act 2003, suggests that these agreements are subject to ministerial oversight rather than legislative scrutiny in terms of penalties for non-compliance.