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 Department of Broadband, Communications and the Digital Economy, commencing 19 December 2007.
The legislative authority under which the instrument is made
Section 31 of the FMA Act enables the Minister for Finance and Deregulation (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 Department of Broadband, Communications and the Digital Economy. 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 Department of Broadband, Communications and the Digital Economy 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 address the need for improved financial management and accountability within the Australian government. This Act provides the framework for managing public money, ensuring transparency, and holding government accountable for its financial decisions. The Parliament of Australia enacted the FMA Act to establish a robust system for the management of public funds, aiming to prevent financial mismanagement and ensure that public resources are used effectively and efficiently. Under section 31 of the FMA Act, the Minister for Finance and Deregulation can enter into agreements with other Ministers to facilitate the adjustment of departmental appropriations based on specified receipts, ensuring that agencies can utilise income generated from certain activities without requiring additional appropriations from Parliament.
Scope and Application
The instrument referred to in the explanatory statement is an agreement made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act) that pertains to "net appropriations" for the Department of Broadband, Communications and the Digital Economy. This agreement is specifically crafted to enable the department to increase its existing appropriations by including certain specified receipts. These receipts, such as proceeds from the sale of minor assets like surplus office furniture, are defined in the agreement and are only applicable as long as the corresponding provisions exist in the annual Appropriation Acts. The purpose of the agreement is to ensure that the department can utilise the received funds for expenditure without requiring additional appropriation from Parliament. The agreement allows flexibility by not being tied to a specific financial year and can be cancelled or varied by the Minister for Finance and Deregulation at any time without the need for consent from the other party. Notably, such agreements are not subject to parliamentary disallowance or sunsetting provisions under the Legislative Instruments Act 2003, thus providing a streamlined process for internal government machinery.
Key Provisions
The main operative sections of the instrument, under section 31 of the Financial Management and Accountability Act 1997 (FMA Act), allow the Minister for Finance and Deregulation to enter into agreements with other Ministers for items marked “net appropriation” in Appropriation Acts. These agreements determine the types of receipts that can increase an existing appropriation for the Department of Broadband, Communications and the Digital Economy. For instance, if the department sells minor assets such as surplus office furniture, the proceeds from these sales can be spent by the department. Without such an agreement, the proceeds from these sales would not be available for spending without further appropriation by Parliament.
The Act imposes specific obligations and requirements on the parties involved. The Minister for Finance and Deregulation can enter into these agreements with other Ministers for the purpose of net appropriations as outlined in Appropriation Acts. These agreements are not limited to the duration of a particular financial year and can continue until circumstances require renewal. The Finance Minister also has the authority to cancel or vary these agreements at any time without the consent of the other party, as outlined in subsection 31(4) of the FMA Act. The Department of Broadband, Communications and the Digital Economy, as the affected agency, is required to agree with the form of the instrument and has been provided with drafts before finalisation.
There are no specified offences, penalties, or consequences for breach in the instrument itself. However, the failure to adhere to the terms of these agreements could lead to financial mismanagement and accountability issues. The FMA Act provides the framework for financial management and accountability in the government sector, and any significant breaches could result in legal or administrative consequences under the broader provisions of the FMA Act or other related legislation. The instrument itself does not outline specific penalties but adheres to the general legal standards and accountability measures stipulated by the FMA Act.