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 the Australian-Japan Foundation, commencing 7 February 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 Australia-Japan Foundation. 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 Australia-Japan Foundation 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. The FMA Act aims to ensure that public funds are managed in a responsible and accountable manner, and that there is transparency in the use of public resources. Section 31 of the FMA Act allows the Minister for Finance and Administration to enter into agreements with other Ministers for the purposes of items in Appropriation Acts that are marked “net appropriation”. This means that the amounts received by an agency as specified in the agreement can be used to increase an existing appropriation for that agency. The purpose of the instrument, the Net Appropriation Agreement for the Australian-Japan Foundation, is to identify the types of receipts that increase an existing appropriation for the Australia-Japan Foundation. 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. The instrument was developed in consultation with the Australia-Japan Foundation, and no further consultation was considered necessary as the instrument is for internal machinery of government purposes only.
Scope and Application
The Net Appropriation Agreement for the Australian-Japan Foundation, commencing 7 February 2005, is an instrument made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act) and pertains specifically to the Australia-Japan Foundation. This agreement allows the Foundation to increase its existing appropriations by the amounts it receives from certain specified transactions, as detailed in the agreement. Such transactions may include the sale of minor assets, such as surplus office furniture and fittings. This legislative instrument is integral to ensuring that the proceeds from these transactions can be spent by the Foundation without requiring further appropriation by Parliament. The agreement can extend for any period, including beyond a financial year, and the Finance Minister has the authority to cancel or vary it at any time. Notably, the instrument's effectiveness is contingent on the existence of specific provisions within the annual Appropriation Acts, which provide the legal basis for increasing the relevant appropriation items. The Australia-Japan Foundation was consulted during the drafting of the instrument and has concurred with its form, and no further consultation was deemed necessary due to the internal nature of the machinery of government.
Key Provisions
The instrument made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act) pertains to a Net Appropriation Agreement for the Australian-Japan Foundation, which came into effect on 7 February 2005. This agreement allows for the increase of existing appropriations for the Foundation based on specified types of receipts (section 31). It is important to note that these agreements are not limited to the duration of a particular Appropriation Act or a financial year and can continue until circumstances require their renewal (subsection 31(3)). The Finance Minister has the authority to cancel or vary these agreements at any time without needing the consent of the other party (subsection 31(4)).
The obligations imposed by this Act on the relevant parties primarily revolve around the reporting and accounting for the specified receipts that increase the appropriations for the Foundation. The annual Appropriation Acts, in conjunction with the Net Appropriation Agreement, ensure that the relevant departmental or administered appropriation items are adjusted in accordance with the agreement, allowing the receipts to be spent by the agency. This means that any amounts received from the sale of minor assets, such as surplus office furniture and fittings, are available for expenditure by the agency without requiring further appropriation by Parliament (section 31). The Australia-Japan Foundation, being the affected agency, was consulted and agrees with the form of the instrument. No further consultation was deemed necessary as the instrument is for internal machinery of government purposes.
There are no explicit offences, penalties, or civil/criminal consequences outlined for breaches of the Net Appropriation Agreement under section 31 of the FMA Act. However, the authority for the Finance Minister to cancel or vary the agreement at any time (subsection 31(4)) suggests that failure to adhere to the terms of the agreement could result in the termination or modification of the agreement. Furthermore, the 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, which implies that there are no specific parliamentary oversight mechanisms in place for these agreements (subsections 44(2) and 54(2) of the Legislative Instruments Act 2003).