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 the Australian Sports Anti Doping 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 the Australian Sports Anti Doping 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 Australian Sports Anti Doping 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 provide a framework for the financial management and accountability of Commonwealth agencies. It aimed to address the need for clear guidelines on how appropriations are to be managed and utilised within the government. The Act was passed by the Australian Parliament, establishing a robust system for financial oversight and responsibility. The policy objective of the FMA Act is to ensure that public funds are managed efficiently and effectively, enhancing transparency and accountability in government spending. Section 31 of the Act specifically allows the Minister for Finance and Administration to enter into agreements for "net appropriations" with other Ministers, facilitating the increase of departmental appropriations by specified receipts. These agreements are crucial for ensuring that agencies can spend certain income, such as proceeds from the sale of minor assets, without needing additional appropriation by Parliament.
Scope and Application
The Net Appropriation Agreement for the Australian Sports Anti Doping Authority, established under section 31 of the Financial Management and Accountability Act 1997, governs how certain receipts can be utilised by the authority without necessitating additional appropriation by Parliament. The agreement applies specifically to the Australian Sports Anti Doping Authority and allows it to increase its appropriation by the amounts received from specified transactions, such as the sale of minor assets like surplus office furniture. This agreement is not limited to a particular Appropriation Act and can continue beyond a financial year until circumstances warrant its renewal or termination by the Minister for Finance and Administration, who has the authority to cancel or modify the agreement at any time. The agreement’s effect is realised through the annual Appropriation Acts, which incorporate the necessary provisions to implement the agreement. Notably, this agreement is not subject to parliamentary disallowance or sunsetting provisions outlined in the Legislative Instruments Act 2003.
Key Provisions
The Financial Management and Accountability Act 1997 (FMA Act) includes provisions under section 31, which enables the Minister for Finance and Administration to enter into agreements with other Ministers for items marked as "net appropriation" in Appropriation Acts. Specifically, this section allows for departmental appropriation items to be increased by the amounts received by an agency, as detailed in the agreement (section 31(3)). The agreement can span any period and is not necessarily limited to the duration of a particular Appropriation Act, providing flexibility in its application. Additionally, the Finance Minister has the authority to cancel or vary the agreement at any time without the need for consent from the other party (section 31(4)).
The obligations imposed by this Act include the necessity for the Australian Sports Anti Doping Authority to comply with the terms of the Net Appropriation Agreement, ensuring that any eligible receipts—such as those from the sale of minor assets—are integrated into the existing appropriation. This agreement facilitates the use of these receipts for expenditure by the agency, avoiding the need for additional appropriations by Parliament. The Australian Sports Anti Doping Authority must work in alignment with the annual Appropriation Acts, which provide specific provisions that give effect to the agreement.
Breach of the provisions outlined in the FMA Act can lead to civil or criminal consequences. While the explanatory statement does not detail specific offences or penalties, it is clear that adherence to the agreement and the terms set forth in the annual Appropriation Acts is mandatory. Any failure to comply could result in legal repercussions, though the exact nature and severity of these consequences are not explicitly stated in the explanatory statement. The importance of internal controls and proper financial management within the agency is underscored by these provisions, ensuring that all activities are within the legal framework established by the Act.