Net Appropriation Agreement for Department of Health and Ageing (29/06/2005)

Overview

The Financial Management and Accountability Act 1997 was enacted by the Parliament of Australia to ensure effective and efficient financial management within the Commonwealth Government. This legislation addresses the need for clear and transparent financial arrangements and accountability mechanisms, particularly concerning the allocation and use of funds. Section 31 of the Act empowers the Minister for Finance to enter into agreements with other ministers regarding items in Appropriation Acts marked as “net appropriations”. These agreements allow for the increase of appropriations for specific departments, such as the Department of Health and Ageing, by amounts received through specified activities, like the sale of minor assets. The policy objective is to provide flexibility in financial management, enabling agencies to utilise received funds without additional appropriation by Parliament. The instrument, commencing 29 June 2005, formalises the agreement for net appropriations for the Department of Health and Ageing, ensuring the agency can spend receipts from activities like asset sales directly, enhancing operational efficiency.

Scope and Application

The Financial Management and Accountability Act 1997 (FMA Act) provides the legislative framework under which the Net Appropriation Agreement for the Department of Health and Ageing was established. This agreement, falling under section 31 of the FMA Act, is specifically designed to facilitate the increase of existing appropriations for the Department of Health and Ageing by incorporating certain specified receipts. These receipts, such as proceeds from the sale of surplus assets like office furniture and fittings, are thus made available for departmental expenditure. This mechanism ensures that the agency can utilise these funds without requiring further appropriation from Parliament. The agreement applies to the Department of Health and Ageing and is effective as long as specific provisions exist within the annual Appropriation Acts. Notably, these agreements are not subject to the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003, underscoring their internal governance nature. The instrument is executed as two separately signed documents, reflecting the agreement of both parties involved.

Key Provisions

Section 31 of the Financial Management and Accountability Act 1997 (FMA Act) facilitates the creation of agreements between the Minister for Finance and Administration and other Ministers for items in Appropriation Acts that are marked as "net appropriation". This means that the appropriations for certain departments can be increased by the amounts received by the agency, as specified in the agreement. Such agreements are not limited to the duration of a particular Appropriation Act or financial year and generally continue until circumstances require their renewal. The Minister for Finance and Administration has the authority to cancel or vary an agreement at any time without needing consent from the other party. The instrument in question, which is the Net Appropriation Agreement for the Department of Health and Ageing, identifies the types of receipts that increase the existing appropriation for the department. This allows the agency to spend the received amounts without requiring further appropriation by Parliament. The obligations imposed by the FMA Act on the parties involved are primarily administrative and financial in nature. The Minister for Finance and Administration is responsible for entering into agreements that specify how net appropriations will be managed and increased. The other Ministers involved must comply with the terms of the agreements and ensure that their departments or agencies adhere to the financial management practices outlined. The Department of Health and Ageing, as the agency affected by this instrument, must also comply with the terms of the agreement and ensure that the specified receipts are correctly accounted for and used as intended. Failure to comply with the terms of the agreements or the provisions of the FMA Act may result in financial mismanagement and accountability issues. While specific offences and penalties are not detailed in the explanatory statement, breaches of financial management and accountability provisions generally can lead to disciplinary action against public officials, financial penalties, and legal action to recover misappropriated funds. The maximum penalties for such breaches can vary depending on the severity and intent behind the breach, but they can include significant fines and imprisonment for public officers found guilty of misconduct or negligence. The Net Appropriation Agreement for the Department of Health and Ageing is effective as long as the specific provisions exist within the annual Appropriation Acts. The eligible receipts covered by the instrument are outlined in clause 5.1. Given the internal nature of the agreement, consultation with external parties was not considered necessary. 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. The instrument is executed as two separately signed documents, reflecting the agreement of both parties involved.