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 for Comsuper, commencing upon registration with the Federal Register of Legislative Instruments.
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 Comsuper. 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
Comsuper 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 provide a framework for the financial management and accountability of Commonwealth entities. This legislation was introduced to address the need for clearer guidelines and more efficient management of government funds, ensuring that public money is spent in a transparent and accountable manner. The Act was enacted by the Parliament of Australia, with the overarching policy objective of enhancing the financial management practices within the Commonwealth sector. The explanatory statement for the instrument made under section 31 of the FMA Act details a Net Appropriation Agreement for Comsuper, illustrating how certain receipts can augment existing appropriations. Such agreements enable agencies to utilise income from specific activities, such as the sale of surplus assets, without requiring additional appropriations from Parliament. This mechanism streamlines financial processes, allowing for more flexible and efficient use of funds within the approved budgetary frameworks.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) pertains to agreements that the Minister for Finance and Administration can enter into with other Ministers to increase departmental or administered appropriation items by certain specified receipts. These agreements, known as "Net Appropriation Agreements," are governed by section 31 of the FMA Act and can extend beyond a single financial year. The particular instrument in question relates to an agreement for Comsuper, and its effect is implemented through the annual Appropriation Acts, which increase the relevant appropriation item based on the agreement. The agreement allows the agency to spend the specified receipts without requiring additional appropriation by Parliament, facilitating the use of funds such as those received from the sale of minor assets like surplus office furniture and fittings. The agreement is limited to internal machinery of government purposes and does not necessitate external consultation beyond the agency involved, in this case, Comsuper. Furthermore, these agreements are exempt from the parliamentary disallowance and sunsetting provisions outlined in the Legislative Instruments Act 2003.
Key Provisions
The Financial Management and Accountability Act 1997 (FMA Act) facilitates the management of financial appropriations by enabling the Minister for Finance and Administration to enter into agreements with other Ministers, pursuant to section 31 (subsection 31(3)), to allow for "net appropriations". This means that certain financial receipts can be used to increase existing appropriations without requiring additional appropriation by Parliament. These agreements can cover any period, not limited to a financial year, and can continue until circumstances necessitate their renewal. 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 (subsection 31(4)).
The obligations imposed by the Act on the parties involved in these agreements are primarily administrative. The Minister for Finance and Administration must ensure that the agreements are made in accordance with the provisions of the FMA Act and the Appropriation Acts. The agreements must specify the types of receipts that will increase the existing appropriation for the relevant agency. The agency, in this case Comsuper, must comply with the terms of the agreement and use the increased appropriations for the intended purposes. Importantly, Comsuper was consulted and agrees with the form of the instrument.
Failure to comply with the provisions of the FMA Act, or the terms of the agreement, may result in legal consequences. However, the explanatory statement does not specify any particular offences, penalties, or consequences for breach. Given 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, it can be inferred that any breaches of these agreements might be subject to internal departmental or ministerial oversight rather than parliamentary scrutiny. The lack of specified penalties suggests that enforcement may rely on administrative actions rather than criminal or civil litigation.