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 Bureau of Statistics, commencing 7 March 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 Australian Bureau of Statistics. 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 Australian Bureau of Statistics 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, enacted by the Parliament of Australia, addresses the need for flexibility in the management of government finances, particularly in relation to appropriations. One of the Act’s provisions, Section 31, allows the Minister for Finance and Administration to enter into agreements with other Ministers regarding “net appropriations”. This means that certain receipts, such as proceeds from the sale of minor assets by agencies, can be utilised for expenditure without the need for additional appropriation by Parliament, thereby improving financial management and accountability within government agencies. The objective of these agreements is to streamline financial operations and ensure that agencies can effectively utilise their resources. This legislative tool facilitates more efficient financial management by enabling agencies to spend certain receipts without the requirement for further parliamentary approval.
Scope and Application
The Financial Management and Accountability Act 1997, as elucidated by the Net Appropriation Agreement for the Australian Bureau of Statistics, applies specifically to the Australian Bureau of Statistics, allowing it to manage and allocate certain receipts more effectively. Under section 31 of the FMA Act, the Minister for Finance and Administration has the authority to enter into agreements with other ministers to increase departmental appropriations based on specified receipts, such as proceeds from the sale of minor assets like surplus office furniture and fittings. This legislative framework ensures that the Australian Bureau of Statistics can utilise these receipts for expenditure without requiring additional appropriation from Parliament. The instrument is enacted through specific provisions in annual Appropriation Acts, which detail the types of eligible receipts and the duration of the agreements, which can extend beyond a single financial year. It is noteworthy that these agreements are exempt from parliamentary disallowance and sunsetting provisions under the Legislative Instruments Act 2003, ensuring their continued efficacy.
Key Provisions
The Financial Management and Accountability Act 1997 (FMA Act) includes provisions that allow the Minister for Finance and Administration to enter into agreements with other ministers regarding appropriations marked as "net appropriations" (section 31). These agreements enable the appropriation items for certain departments, including administered departments, to be increased by specific receipts as outlined in the agreement. The agreements can cover any period and are not limited to the duration of a particular Appropriation Act. Such agreements do not need to be renewed annually and can be cancelled or varied at any time by the Minister for Finance and Administration without requiring consent from the other party (subsection 31(4)). The agreement for the Australian Bureau of Statistics, for example, specifies the types of receipts that will increase the existing appropriation, allowing the agency to spend these receipts without the need for additional appropriation by Parliament.
The obligations under the FMA Act for the parties involved in these agreements are primarily administrative. The Finance Minister must ensure that the agreements are clear, comprehensive, and in compliance with the requirements set out in the Act. The affected agencies, such as the Australian Bureau of Statistics, must adhere to the terms of the agreement, ensuring that any specified receipts are properly accounted for and spent as per the agreement. The Australian Bureau of Statistics was provided with drafts of the instrument before finalisation and has agreed to the form of the instrument, highlighting the internal nature of these agreements and their focus on government machinery.
While the FMA Act does not specify particular offences or penalties for breaches of the agreements made under section 31, the general principle is that any breach of statutory obligations could potentially lead to administrative or legal consequences. However, given that these agreements are internal to the government, the primary consequence of a breach would likely be internal disciplinary action or rectification of the breach rather than formal penalties. The absence of specific penalties under the FMA Act for these agreements suggests that the focus is on ensuring compliance through internal mechanisms rather than through punitive measures.