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 Great Barrier Marine Park Authority, commencing upon registration on 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 Great Barrier Marine Park Authority. 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 Great Barrier Marine Park Authority 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 issues related to the financial management and accountability of Commonwealth entities. The Act was introduced by the Australian Parliament with the objective of ensuring proper financial governance and accountability within the federal government. Section 31 of the FMA Act allows the Minister for Finance and Administration to enter into agreements with other ministers concerning appropriations marked as “net appropriation”. These agreements facilitate the increase of departmental appropriation items by amounts received by an agency as specified in the agreement, which can then be spent by the agency. The agreements may be for any period, including longer than a financial year, and can be cancelled or varied by the Minister for Finance and Administration at any time without the consent of the other party. The purpose of this instrument is to enable the Great Barrier Marine Park Authority to increase its existing appropriations by specified types of receipts, such as the sale of minor assets, thereby ensuring these receipts are available for expenditure by the authority.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) applies to the Minister for Finance and Administration, who has the authority under section 31 to enter into agreements with other Ministers for items in Appropriation Acts that are marked "net appropriation". This allows for the increase of departmental or administered appropriation items by amounts received by an agency as specified in the agreement. The Net Appropriation Agreement for Great Barrier Marine Park Authority, which is the instrument in question, identifies the types of receipts that increase existing appropriations for the Authority. These agreements continue until circumstances require their renewal, and the Finance Minister has the power to cancel or vary an agreement at any time without the consent of the other party. The agreement has effect only while the relevant specific provisions exist in the annual Appropriation Acts and covers eligible receipts as set out in clause 5.1 of the instrument. Consultation with the affected agency, the Great Barrier Marine Park Authority, was undertaken before the instrument was finalised. It is noted 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.
Key Provisions
The main operative sections of the Financial Management and Accountability Act 1997 (FMA Act) that relate to the Net Appropriation Agreement for the Great Barrier Marine Park Authority are sections 31, 10 of Appropriation Act (No.1) 2004-2005, and clause 5.1 of the instrument itself. Section 31 empowers the Minister for Finance and Administration to enter into agreements with other Ministers regarding “net appropriations” for items marked as such in Appropriation Acts. This section allows for the adjustment of departmental or administered appropriation items to include amounts received by the agency as specified in the agreement. The specific provision of section 10 of Appropriation Act (No.1) 2004-2005, along with similar provisions in other appropriation acts, complements this by detailing the exact nature of the receipts that will increase the appropriation. Clause 5.1 of the instrument identifies the eligible receipts that will be considered for this purpose.
The obligations imposed by this Act on the parties involved are primarily administrative and procedural. The Minister for Finance and Administration must ensure that any agreements entered into under section 31 are consistent with the financial requirements of the government and the agencies involved. The Great Barrier Marine Park Authority must comply with the terms of the agreement and report on the receipts and expenditures in line with the agreement. Additionally, the authority must ensure that any transactions eligible under the agreement are accurately recorded and reported to facilitate the appropriation of funds. The Finance Minister also retains the ability to cancel or vary the agreement at any time without needing the consent of the other party, as per subsection 31(4) of the FMA Act.
Breaches of the obligations outlined in the FMA Act can lead to various consequences. While the specific Act does not detail offences or penalties, the broader framework of financial management laws in Australia includes potential civil and criminal penalties for non-compliance. Such penalties may include fines and, in severe cases, imprisonment. The exact penalties depend on the nature and severity of the breach and would be subject to the general financial administration laws and regulations in force. Additionally, failure to adhere to the terms of the agreement could result in financial losses for the authority, as the agreed-upon receipts might not be available for expenditure without proper appropriation.