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 Department of Families, Community Services and Indigenous Affairs, commencing upon registration on the Federal Register of Legislative Instruments. This agreement will cover eligible receipts received by the agency on or after 5 May 2006.
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 Department of Families, Community Services and Indigenous Affairs. 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. This agreement will cover eligible receipts received by the agency on or after 5 May 2006.
Consultation
The Department of Families, Community Services and Indigenous Affairs 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 entities. It was introduced to address the need for a cohesive and transparent approach to financial management across government departments and agencies. The Act was passed by the Australian Parliament and aims to ensure that public money is managed efficiently, effectively, and in accordance with the law. Section 31 of the FMA Act specifically allows the Minister for Finance and Administration to enter into agreements with other Ministers concerning items in Appropriation Acts that are marked as "net appropriations". These agreements enable the appropriation of certain funds to be increased by specified receipts, thereby allowing agencies to use these additional funds for their intended purposes without the need for further appropriation by Parliament. The agreements are intended to provide flexibility in the management of government finances, ensuring that agencies can respond to changing circumstances and priorities.
Scope and Application
The instrument related to the Financial Management and Accountability Act 1997 (FMA Act) pertains to a Net Appropriation Agreement specifically for the Department of Families, Community Services and Indigenous Affairs, which applies to eligible receipts received by the agency on or after 5 May 2006. This Act empowers the Minister for Finance and Administration to enter into agreements with other Ministers for items in Appropriation Acts that are marked as "net appropriation." Such agreements allow for the increase of departmental appropriation items by amounts received by an agency as specified in the agreement. The agreement is effective as long as the specific provisions exist within the annual Appropriation Acts, and it can be varied or cancelled by the Finance Minister at any time without the consent of the other party. The instrument applies exclusively to the Department of Families, Community Services and Indigenous Affairs, and it was developed in consultation with the agency, which agrees with the form of the instrument. Notably, agreements made under section 31 of the FMA Act are exempt from the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003.
Key Provisions
The main operative sections of this legislation pertain to agreements under section 31 of the Financial Management and Accountability Act 1997 (FMA Act), which enable the Minister for Finance and Administration to enter into agreements with other Ministers for "net appropriation" items. Section 31(3) allows these agreements to be for any period, and section 31(4) permits the Finance Minister to cancel or vary the agreement at any time. This agreement specifies the types of receipts that increase an existing appropriation for the Department of Families, Community Services and Indigenous Affairs. The agreement applies to eligible receipts received by the agency on or after 5 May 2006. The relevant appropriation items are increased by the amounts received, as outlined in the agreement, enabling the agency to spend the receipts.
The obligations and requirements imposed by the Act include the necessity for the Minister for Finance and Administration to consult with the relevant department before finalising the agreement. In this instance, the Department of Families, Community Services and Indigenous Affairs was provided with drafts of the instrument and agreed with its form. Furthermore, as the agreement pertains to internal machinery of government purposes, no further consultation with other persons was considered necessary. The agreement is effective only while the relevant specific provisions exist in the annual Appropriation Acts. The eligible receipts covered by the agreement are set out in clause 5.1 of the instrument. This ensures that the receipts are spent by the agency as intended.
There are no specified offences, penalties, or civil/criminal consequences for breach of this agreement within the text of the legislation. However, section 31(4) of the FMA Act provides that the Finance Minister may cancel or vary an agreement at any time without the consent of the other party. This demonstrates that there is a mechanism in place to address any issues that may arise from the agreement, although the consequences of such actions are not explicitly outlined in the text. Additionally, 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 stated in item 19 in subsection 44(2) and item 17 in subsection 54(2) of the Legislative Instruments Act 2003.