Net Appropriation Agreement for the Australian Communications and Media Authority (26/09/2005)

Overview

The Financial Management and Accountability Act 1997 (FMA Act) was enacted to provide a framework for the financial management of the Commonwealth and to establish mechanisms for accountability. This legislation was introduced to address the need for a clear and systematic approach to the appropriation and management of Commonwealth funds. Enacted by the Australian Parliament, the FMA Act outlines the legal basis for the financial operations of government agencies and ensures that public funds are used responsibly and efficiently. The Act aims to enhance the transparency and accountability of financial management within the government by setting out the procedures for appropriation and the allocation of funds. Under section 31 of the FMA Act, the Minister for Finance and Administration can enter into agreements with other ministers to allow certain receipts to increase departmental appropriations, thereby facilitating the efficient use of funds received by agencies through activities such as the sale of surplus assets.

Scope and Application

The Financial Management and Accountability Act 1997, specifically under Section 31, applies to the Minister for Finance and Administration, who is empowered to enter into agreements with other Ministers regarding items in Appropriation Acts that are designated as "net appropriation". These agreements pertain to increasing departmental or administered appropriation items by the amounts received by an agency as specified in the agreement. This process is designed to enhance the financial flexibility of agencies by allowing them to utilise certain receipts without requiring additional appropriation by Parliament. The Australian Communications and Media Authority is the specific agency affected by the instrument mentioned in the explanatory statement, which identifies the types of receipts that increase an existing appropriation for this authority. The instrument's operation is contingent upon the existence of specific provisions in the annual Appropriation Acts, and eligible receipts are detailed in clause 5.1 of the instrument. Importantly, agreements made under Section 31 of the FMA Act are exempt from the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003.

Key Provisions

Section 31 of the Financial Management and Accountability Act 1997 (FMA Act) allows the Minister for Finance and Administration to enter into agreements with other Ministers for items in Appropriation Acts that are marked “net appropriation”. The agreements permit the increase of departmental or administered appropriation items by amounts received by an agency, as specified in the agreement. These agreements are not restricted to a particular Appropriation Act or Acts, and may extend beyond a financial year. They continue until circumstances require their renewal, and the Finance Minister can cancel or vary an agreement at any time without the consent of the other party. The obligations imposed by the Act on the parties involved include providing drafts of the instrument to the affected agency for review and agreement before finalisation. In this case, the Australian Communications and Media Authority was provided with drafts of the instrument and agrees with its form. Given that the instrument is for internal machinery of government purposes only, no consultation was considered necessary with other persons, in accordance with sections 17 and 18 of the Legislative Instruments Act 2003. The Act also outlines the eligible receipts covered by the instrument, as set out in clause 5.1. For instance, proceeds from the sale of minor assets like surplus office furniture and fittings can be spent by the agency without further appropriation by Parliament. The annual appropriation Acts give effect to the instrument, enabling the relevant appropriation item to be increased in accordance with the agreement. Agreements made under section 31 of the FMA Act are exempt from the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003. This means that such agreements do not require parliamentary approval or automatic expiration, as specified in item 19 in subsection 44(2) and item 17 in subsection 54(2) of the Legislative Instruments Act 2003. This exemption allows for more flexibility in managing financial appropriations and ensuring that agencies can effectively utilise the receipts they generate.