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 Bureau of Meteorology, commencing 24 June 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 Bureau of Meteorology. 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 Bureau of Meteorology 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 establish a framework for the financial management and accountability of the Commonwealth. This legislation aims to ensure that public funds are managed effectively, efficiently and in accordance with the law. The Act was introduced to address the need for clear guidelines and controls over the use of public money, thereby enhancing transparency and accountability in the management of Commonwealth finances. Enacted by the Parliament of Australia, the Act provides a comprehensive set of rules and procedures designed to safeguard public resources and promote prudent financial management across all government agencies. The policy objective of the FMA Act is to ensure that public money is used responsibly and that there is clear accountability for financial decisions and outcomes within the government.
Scope and Application
The Net Appropriation Agreement For the Bureau of Meteorology, made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act), applies specifically to the Bureau of Meteorology. This agreement allows the Bureau to increase its existing appropriations by certain receipts, as identified in the instrument, enabling these receipts to be spent by the Bureau without the need for additional appropriations by Parliament. The agreement is not subject to parliamentary disallowance or sunsetting provisions and can be in effect for any period, continuing until circumstances require renewal. The agreement is effective only for the duration that specific provisions exist in the annual Appropriation Acts, which provide that the relevant departmental appropriation item is increased in accordance with the agreement. The instrument was developed in consultation with the Bureau of Meteorology, which agreed with its form, and no further consultation was deemed necessary as it pertains solely to internal machinery of government purposes.
Key Provisions
The main operative sections of the Financial Management and Accountability Act 1997 (FMA Act), as evidenced by the instrument under scrutiny, are sections 31 and 44. Section 31 allows the Minister for Finance and Administration to enter into agreements with other Ministers for items in Appropriation Acts that are marked "net appropriation". This section, when read in conjunction with subsection 31(3), permits these agreements to cover any period, including periods longer than a financial year. Furthermore, subsection 31(4) empowers the Finance Minister to cancel or vary these agreements at any time without the consent of the other party.
The Act imposes several obligations on the parties involved in these agreements. The Finance Minister must ensure that any agreement made under section 31 clearly identifies the types of receipts that increase existing appropriations for the specified agencies. Additionally, the annual Appropriation Acts must include specific provisions that give effect to these agreements, ensuring that the relevant appropriation items are increased in accordance with the agreement. This ensures that the receipts from activities such as the sale of minor assets by an agency can be spent by that agency.
Failure to adhere to the provisions of the FMA Act may result in various consequences. While the explanatory statement does not specify detailed offences or penalties for breaches of section 31 agreements, it is important to note that the Financial Management and Accountability Act 1997, in general, provides for both civil and criminal penalties for non-compliance. Civil penalties can include fines and administrative penalties, while criminal penalties may include imprisonment, reflecting the seriousness of financial mismanagement and breaches of accountability in the public sector. The exact penalties depend on the nature and severity of the breach, as outlined in the broader provisions of the FMA Act.