Net Appropriation Agreement for the Department of Employment and Workplace Relations (23/06/2005)

Overview

The Financial Management and Accountability Act 1997 was enacted to address the need for a robust framework governing financial management and accountability within Australian federal government agencies. This Act provides the legislative basis for ensuring that public funds are managed prudently and transparently, aligning with the broader policy objective of enhancing public sector efficiency and effectiveness. Section 31 of the FMA Act allows the Minister for Finance and Administration to enter into agreements with other ministers to facilitate the use of certain receipts by agencies. These agreements, known as "Net Appropriation Agreements," enable agencies to increase their appropriations by the amounts received from specified activities, such as the sale of surplus assets, without the need for additional parliamentary appropriation. This mechanism streamlines financial management by providing agencies with the flexibility to utilise available funds more effectively. The Net Appropriation Agreement for the Department of Workplace Relations, commencing on 23 June 2005, exemplifies how these agreements operate within the framework established by the FMA Act.

Scope and Application

The Financial Management and Accountability Act 1997, through its Section 31, authorises the Minister for Finance and Administration to enter into agreements with other ministers concerning items in Appropriation Acts that are marked as "net appropriation." These agreements allow departmental or, in certain cases, administered appropriation items to be increased by specified amounts received by an agency as outlined in the agreement. The scope of these agreements is not limited to a specific Appropriation Act or financial year, meaning they can extend beyond a single year and need not be tied to a particular Act. Such agreements enable the agency to utilise the received amounts for expenditure, as without them, the agency would require additional appropriation by Parliament to spend such amounts. For instance, if an agency sells minor assets like surplus office furniture, the proceeds from such sales would be available for departmental expenditure under the terms of the agreement. The instrument in question pertains specifically to the Department of Workplace Relations and identifies the types of receipts that increase existing appropriations for this department, with its effect being contingent upon the existence of specific provisions within the annual Appropriation Acts. This instrument was developed in consultation with the Department of Workplace Relations, which concurs with its form, and as it pertains to internal government machinery, no further consultation was deemed necessary.

Key Provisions

The Net Appropriation Agreement for the Department of Workplace Relations, commencing 23 June 2005, under section 31 of the Financial Management and Accountability Act 1997 (FMA Act), enables the Finance Minister to enter into agreements with other Ministers regarding items marked "net appropriation" in Appropriation Acts (section 31(1)). These agreements allow for the increase of departmental appropriation items by amounts received by an agency, as specified in the agreement (section 31(2)). The agreements can be for any period, not necessarily tied to a specific Appropriation Act or financial year, and can be cancelled or varied by the Finance Minister at any time without consent from the other party (subsections 31(3) and 31(4)). The agreement identifies types of receipts that increase existing appropriations for the Department of Workplace Relations, and these are given effect by the annual Appropriation Acts, which detail how the relevant appropriation items are increased according to the agreement, thereby allowing the receipts to be spent by the agency. The obligations imposed by this agreement include the requirement for the Finance Minister to consult with the affected agency, which in this case is the Department of Workplace Relations, before finalising the instrument. The Department of Workplace Relations was provided with drafts of the instrument and agrees with its form. Since the instrument is for internal machinery of government purposes only, no further consultation was considered necessary with other persons (sections 17 and 18 of the Legislative Instruments Act 2003). The specific provisions within the annual Appropriation Acts give effect to the instrument, and thus, the instrument only has effect while these specific provisions exist in the annual Appropriation Acts. The eligible receipts covered by the instrument are detailed in clause 5.1 of the instrument. 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, as indicated by item 19 in subsection 44(2) and item 17 in subsection 54(2) of the Legislative Instruments Act 2003. This means that such agreements do not require parliamentary approval to be disallowed or to expire, unlike other legislative instruments. This exemption ensures that the flexibility and efficiency of financial management can be maintained without undue parliamentary interference, provided that the agreements are within the scope and purpose of the FMA Act.