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 Fair Pay Commission Secretariat, commencing on the later of:
- the Finance Minister issuing a direction under section 32 of the FMA Act transferring some or all of the departmental appropriation for the Department of Employment and Workplace Relations (DEWR) to the agency; and
- registration of this instrument 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 the Australian Fair Pay Commission Secretariat. 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 Fair Pay Commission Secretariat 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 was enacted to enhance the management of public finances and accountability within the Australian government. This legislation was introduced to address the need for a clear framework governing the appropriation and expenditure of public funds, ensuring that financial practices are transparent and accountable. The Act provides mechanisms for agreements concerning net appropriations, allowing for the adjustment of departmental appropriations based on specified receipts. The enacting body for this Act was the Australian Parliament, with the policy objective being to improve financial management and ensure accountability in the allocation and use of public funds. The Act empowers the Minister for Finance and Administration to enter into agreements with other Ministers to facilitate the re-allocation of funds, thereby ensuring that agencies can utilise receipts from various sources to meet their expenditure needs effectively.
Scope and Application
The instrument described in the explanatory statement pertains to a Net Appropriation Agreement made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act). This agreement is specifically for the Australian Fair Pay Commission Secretariat, effective from the later of two events: the issuance of a direction by the Finance Minister under section 32 of the FMA Act transferring some or all of the departmental appropriation for the Department of Employment and Workplace Relations to the agency, and the registration of this instrument on the Federal Register of Legislative Instruments. This instrument is designed to enable the Finance Minister to enter into agreements with other Ministers concerning items in Appropriation Acts that are marked as “net appropriation.” These agreements facilitate the increase of existing appropriations for the Australian Fair Pay Commission Secretariat through specified receipts, which are then made available for expenditure by the agency, such as proceeds from the sale of minor assets like surplus office furniture and fittings. The agreement is not limited to a particular financial year and can continue until circumstances necessitate renewal or variation by the Finance Minister. Notably, this instrument is subject to the annual Appropriation Acts, which incorporate specific provisions that give effect to the agreement, and it is exempt from the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003.
Key Provisions
The Financial Management and Accountability Act 1997 (FMA Act) provides, in Section 31, a framework for agreements concerning “net appropriations.” These agreements are designed to allow specific appropriations to be increased by the amounts received by an agency as outlined in the agreement. This legislative provision enables departments and agencies to effectively manage their finances by increasing their appropriation for certain purposes. The agreement can be for any period, not necessarily tied to a particular Appropriation Act or financial year, and it can be cancelled or varied at any time by the Minister for Finance and Administration without needing consent from the other party.
The obligations imposed by the FMA Act on the parties involved are primarily centered around the terms set out in the agreement. The Minister for Finance and Administration is responsible for entering into these agreements with other ministers, ensuring they comply with the terms and conditions stipulated. The agencies, such as the Australian Fair Pay Commission Secretariat in this instance, must adhere to the specific provisions outlined in the agreement, which are enacted through the annual Appropriation Acts. These Acts specify how the appropriations are increased and the types of receipts that qualify for this increase. Agencies must also ensure that any sales or receipts, such as from the sale of surplus office furniture, are correctly reported and used as per the agreement.
In terms of compliance and enforcement, while the explanatory statement does not explicitly detail offences or penalties, it is implied that any breach of the terms of the agreement could lead to financial mismanagement and potential legal consequences. The FMA Act itself, however, outlines various measures for ensuring compliance and accountability, including audits and financial reporting requirements. Breaches of these provisions could result in civil or criminal penalties, although the specific penalties are not detailed in the explanatory statement. The overarching intent is to maintain strict financial oversight and accountability to ensure public funds are used appropriately and efficiently.