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 Net Appropriation Agreement (Departmental) For Office of Film and Literature Classification, commencing 1 July 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
The instrument identifies the types of receipts which increase an existing appropriation for the Office of Film and Literature Classification. 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 agency.
For example, where an agency sells minor assets, such as its surplus office furniture and fittings, the amounts received from the sale will be available for expenditure by that agency. Without the agreement, any amounts received by the agency would not be available to be spent by the agency, without further appropriation by Parliament.
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.
Eligible receipts covered by the instrument are set out in clause 5.1 of the instrument.
Consultation
The Office of Film and Literature Classification is the agency affected by this instrument. The agency was provided with drafts of the instrument before the instrument was finalised and agrees with the form 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 robust financial management and accountability within the Australian public sector. This legislation provides a framework for ensuring that public funds are managed effectively and transparently. Section 31 of the FMA Act specifically empowers 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 allow for the increase of departmental appropriations based on specified receipts, ensuring that revenue generated by agencies can be utilised for their intended purposes without requiring further appropriation by Parliament. The purpose of these agreements is to enhance financial flexibility and efficiency within the public sector, allowing agencies to manage their budgets more effectively and respond to revenue fluctuations. The enacting body responsible for this legislation is the Parliament of Australia, with the policy objective being to improve financial management practices and ensure accountability in the use of public funds.
Scope and Application
The instrument under consideration, made pursuant to section 31 of the Financial Management and Accountability Act 1997, pertains specifically to the Office of Film and Literature Classification. It facilitates the incorporation of certain receipts into the existing appropriation for the Office, thereby enabling the agency to utilise these funds for its operations. This arrangement is formalised through annual appropriation acts, which specify that the relevant departmental appropriation item is augmented in accordance with the agreement. The agreement allows for the agency to spend amounts received from specified transactions, such as the sale of minor assets like surplus office furniture and fittings, without requiring additional appropriation by Parliament. The instrument is limited in scope to the Office of Film and Literature Classification and is in effect only while the specific provisions of the annual appropriation acts remain in place. This agreement mechanism is integral for ensuring that the agency can efficiently manage its financial resources.
Key Provisions
The main operative sections of the Financial Management and Accountability Act 1997 (FMA Act) relevant to this instrument are sections 31 and 31(3) and (4). Section 31 provides the authority for the Minister for Finance and Administration to enter into agreements with other Ministers regarding items in Appropriation Acts that are marked as "net appropriations". Section 31(3) allows these agreements to be for any period, not necessarily limited to a financial year, while subsection 31(4) grants the Finance Minister the authority to cancel or vary an agreement at any time without the consent of the other party. The instrument, titled "Net Appropriation Agreement (Departmental) For Office of Film and Literature Classification", identifies the types of receipts that increase an existing appropriation for the Office of Film and Literature Classification. It is given effect by specific provisions within the annual Appropriation Acts, which provide that the relevant departmental or administered appropriation item is increased in accordance with the agreement.
The Act imposes certain obligations on the parties involved in these agreements. The Minister for Finance and Administration must enter into agreements that specify the types of receipts that will increase an existing appropriation for the Office of Film and Literature Classification. The Office of Film and Literature Classification must comply with the terms of the agreement, ensuring that any eligible receipts are accounted for and used in accordance with the agreement. The Finance Minister retains the flexibility to cancel or vary the agreement at any time, providing a level of control over the financial arrangements between departments.
Breaches of the obligations outlined in the FMA Act may result in various consequences. While the explanatory statement does not specify particular offences or penalties, the Act generally provides for civil and criminal liability for breaches of the Act. Civil penalties may include fines, and in more severe cases, criminal penalties such as imprisonment may apply. The exact penalties would depend on the nature and severity of the breach, as well as any relevant provisions within the FMA Act or other applicable legislation. The instrument itself does not specify particular penalties for non-compliance, but it is important to note that 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. This means that the agreements remain in effect unless otherwise cancelled or varied by the Minister for Finance and Administration.