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 Parliamentary Services, commencing 7 March 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 Department of Parliamentary Services. 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 Parliamentary Services 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) addresses the need for efficient and accountable financial management within the Australian government. Enacted by the Parliament of Australia, the Act aims to ensure that public funds are managed responsibly and transparently. Section 31 of the FMA Act empowers the Minister for Finance and Administration to enter into agreements with other ministers concerning items in Appropriation Acts marked as "net appropriations". This provision facilitates the reallocation and increase of departmental appropriations based on specified receipts, thereby allowing agencies to utilise these funds without additional parliamentary appropriation. The policy objective is to streamline financial processes and enhance accountability within government agencies by enabling them to manage their financial resources more effectively.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) applies to the Finance Minister and other Ministers, enabling the former to enter into agreements for net appropriations with the latter under section 31 of the FMA Act. These agreements pertain to the financial management of departmental or administered appropriation items in Appropriation Acts, allowing increases in appropriations based on specified receipts. The instrument in question, the Net Appropriation Agreement for the Department of Parliamentary Services, is effective from 7 March 2005, and it identifies types of receipts that augment the department's appropriation. The agreement ensures that proceeds from certain transactions, such as the sale of minor assets like surplus office furniture, are available for departmental expenditure without requiring further appropriation by Parliament. The instrument operates in conjunction with specific provisions in the annual Appropriation Acts, and its effect is contingent upon the existence of these provisions. The Department of Parliamentary Services, the affected agency, was consulted during the drafting phase and agrees with the instrument's form. Given its internal governmental nature, no further consultation was deemed necessary. Importantly, 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 the Financial Management and Accountability Act 1997, as applied in this instrument, are sections 31 and 44. Section 31(1) allows the Minister for Finance and Administration to enter into agreements with other ministers for the purposes of items in Appropriation Acts that are marked “net appropriation.” These agreements specify how departmental appropriation items can be increased by amounts received by an agency. Section 44(2) clarifies that these agreements are not subject to the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003.
The obligations and requirements imposed by this Act on the parties include the necessity for the Finance Minister to enter into agreements that define how certain receipts can be used to increase appropriations. These agreements must be made in accordance with the relevant provisions in the annual Appropriation Acts. Furthermore, the Finance Minister has the authority to cancel or vary these agreements at any time without requiring the consent of the other party, as stipulated in section 31(4). The Department of Parliamentary Services, as the affected agency, must ensure that it complies with the terms of these agreements to effectively manage its appropriations and expenditures.
There are no specific offences, penalties, or civil/criminal consequences outlined in this instrument for breach of the agreement. However, failure to comply with the terms of the agreement could potentially lead to financial mismanagement or misuse of appropriations, which could result in internal disciplinary actions or other administrative consequences. The instrument does not provide explicit maximum penalties for breaches, as it is primarily an administrative tool for managing appropriations within the government framework. Instead, any violations of the agreement would likely be addressed through internal government processes or by legislative oversight.