EXPLANATORY STATEMENT
Financial Management and Accountability Act 1997,
Net Appropriation Agreement Variation (No.2) 2005
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 Variation (No.2) 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” (net appropriation agreements).
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, provides for appropriation items to be increased by amounts received by an agency for items specified in the agreement, allowing amounts equivalent to the receipts to be spent.
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 varies the operation of the current net appropriation agreements for eleven Australian Government agencies subject to the FMA Act. The variation effected by the instrument allows the current net appropriation agreements for those eleven agencies to capture amounts that were received during periods in which these agencies operated without a net appropriation agreement.
The instrument does not operate retrospectively to authorise past spending of receipts collected by the relevant agencies during a period for which there was no agreement in place.
The effect of the instrument will be to provide agencies with an appropriation authority to spend amounts equivalent to receipts collected when, in fact, there was no net appropriation agreement in place. The instrument authorises only future spending of past receipts. The instrument will ensure that agencies are, going forward, placed in the position they would have been in, had all amounts been credited to the agency, pursuant to a valid net appropriation agreement.
The instrument commences upon registration on the Federal Register of Legislative Instruments.
Consultation
The instrument affects eleven FMA Act agencies having a current net appropriation agreement. The Department of Finance and Administration (Finance) has consulted with each of these agencies, and the Australian National Audit Office, regarding the effect of this 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.