Net Appropriation Agreement for the Department of the House of Representatives

Overview

The Financial Management and Accountability Act 1997 (FMA Act) was enacted by the Australian Parliament to provide a framework for the financial management and accountability of Commonwealth entities, including the regulation of appropriations. One of the key problems the Act aimed to address was the need for flexibility in managing departmental budgets, particularly in relation to unexpected or additional receipts. The Act, through section 31, allows the Minister for Finance to enter into agreements with other Ministers to increase appropriations for certain items, known as "net appropriations", based on receipts such as the sale of minor assets. These agreements enable agencies to spend these additional funds without the need for further appropriation by Parliament, thereby improving financial flexibility and efficiency. The policy objective of this legislative provision is to enhance the financial management practices of government departments by allowing for the efficient use of additional funds received during the course of operations.

Scope and Application

The Net Appropriation Agreement for the Department of the House of Representatives, made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act), pertains specifically to the Department of the House of Representatives, allowing it to increase its appropriations by certain specified receipts. This agreement is designed to enable the department to spend receipts from the sale of minor assets, such as surplus office furniture and fittings, without requiring additional appropriation by Parliament. The agreement operates within the framework of the annual Appropriation Acts, where specific provisions give effect to the instrument and detail the types of eligible receipts that can increase the existing appropriation. The agreement can be for any period, including beyond a single financial year, and can be cancelled or varied by the Minister for Finance and Administration at any time without consent from the other party. Notably, this instrument is exempt from parliamentary disallowance and sunsetting provisions under the Legislative Instruments Act 2003, as outlined in subsections 44(2) and 54(2) of that Act.

Key Provisions

The Net Appropriation Agreement for the Department of the House of Representatives, commencing 1 March 2005, is made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act) and allows for an increase in the appropriation for the Department based on certain receipts. Section 31(1) of the FMA Act provides that the Minister for Finance and Administration can enter into agreements with other ministers for items in Appropriation Acts marked “net appropriation”. This means that the department's appropriation can be increased by the amounts received by the agency as specified in the agreement, such as the sale of minor assets like surplus office furniture and fittings. The agreement can be for any period and does not have to relate to a particular Appropriation Act or Acts. Section 31(4) of the FMA Act also allows the Finance Minister to cancel or vary an agreement at any time without the consent of the other party. The agreement is given effect by the annual Appropriation Acts, which provide that the relevant departmental appropriation item is increased in accordance with the agreement, enabling the receipts to be spent by the agency. The Net Appropriation Agreement imposes certain obligations on the parties involved. The Finance Minister is required to enter into agreements with other ministers for items in Appropriation Acts that are marked “net appropriation”. The department affected by the agreement, in this case the Department of the House of Representatives, is required to provide drafts of the instrument before it is finalised and to agree with the form of the instrument. The agreement must also comply with the provisions of the annual Appropriation Acts, which set out the specific provisions that give effect to the instrument. The Finance Minister has the power to cancel or vary an agreement at any time without the consent of the other party. There are no offences, penalties, or civil/criminal consequences for breach of the Net Appropriation Agreement. However, failure to comply with the agreement or the provisions of the annual Appropriation Acts could result in the department not being able to spend the receipts received by the agency without further appropriation by Parliament. The agreement is not subject to the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003, which means that it does not need to be reviewed or approved by Parliament. Overall, the Net Appropriation Agreement provides a mechanism for increasing the appropriation for the Department of the House of Representatives based on certain receipts, while also imposing certain obligations on the parties involved and ensuring compliance with the provisions of the annual Appropriation Acts.