Net Appropriation Agreement for the Department of the Treasury

Overview

The Financial Management and Accountability Act 1997 (FMA Act) was enacted to establish a framework for effective financial management and accountability within the Australian government. The Act was introduced to address the need for clear guidelines and procedures concerning the management of public funds, ensuring transparency and responsibility in the use of appropriations. The FMA Act provides a comprehensive legislative basis for the financial administration of Commonwealth entities. The explanatory statement pertains to an instrument made under section 31 of the FMA Act, which allows the Minister for Finance and Administration to enter into agreements for "net appropriations" with other ministers. These agreements pertain to items in Appropriation Acts marked as "net appropriation," enabling certain receipts to increase existing appropriations for specified departments, such as the Department of the Treasury. The purpose of these agreements is to ensure that funds received by an agency, such as proceeds from the sale of surplus assets, are available for expenditure by that agency without requiring additional appropriation by Parliament. The instrument is effective only during the period when specific provisions exist in the annual Appropriation Acts.

Scope and Application

The Financial Management and Accountability Act 1997 (FMA Act) authorises the Minister for Finance and Administration to enter into agreements with other Ministers concerning items in Appropriation Acts marked as "net appropriations." These agreements allow for an increase in departmental appropriation items by amounts received by an agency as specified in the agreement. The purpose of the instrument related to this Act is to identify the types of receipts that increase an existing appropriation for the Department of the Treasury, ensuring that the proceeds from certain transactions, such as the sale of minor assets like surplus office furniture and fittings, are available for expenditure by the agency. The instrument is implemented through the annual appropriation Acts, which stipulate that the relevant departmental appropriation item is increased in accordance with the agreement. Notably, the instrument is only effective as long as the specific provisions exist within the annual appropriation Acts. The Department of the Treasury is the sole agency affected by this instrument, and while it was consulted during the drafting process, no further consultation was deemed necessary as the instrument pertains solely to internal government operations. Additionally, 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 instrument, established under section 31 of the Financial Management and Accountability Act 1997 (FMA Act), permit the Minister for Finance and Administration to enter into agreements with other Ministers to facilitate the increase of certain appropriation items. Specifically, section 31(1) authorises these agreements for items marked as “net appropriation” in Appropriation Acts. The agreements allow for departmental appropriation items to be augmented by specified receipts, as detailed in the agreement (section 31(2)). These agreements can cover any period, not necessarily tied to a particular financial year, and may be altered or cancelled by the Finance Minister at any time without requiring consent from the other party (subsection 31(3) and (4)). The instrument, which identifies the types of receipts that increase the existing appropriation for the Department of the Treasury, is implemented through the annual Appropriation Acts, which ensure that the relevant appropriation items are increased in line with the agreement (subsection 31(3)). The obligations imposed by the Act on the parties involved are primarily centred around the effective and transparent management of financial resources. The Minister for Finance and Administration must ensure that any agreements entered into under section 31 of the FMA Act are clearly documented and specify the types of receipts that will augment the appropriation items. The annual Appropriation Acts must also incorporate provisions that give effect to these agreements, ensuring that the specified receipts are made available for departmental expenditure. The Department of the Treasury, as the agency affected, must comply with the terms of the agreement and ensure that any eligible receipts are accounted for and used in accordance with the agreement. Additionally, the Act mandates that the Department of the Treasury consult with the relevant parties and provide drafts of the instrument for review before finalisation, ensuring that all stakeholders agree with the form of the instrument. The legislation does not explicitly outline specific offences or penalties for breach of the agreement provisions. However, breaches of the Financial Management and Accountability Act 1997 or the annual Appropriation Acts could potentially lead to legal consequences, including civil or criminal liability for improper financial management or misuse of funds. The maximum penalties for such offences would be determined by the relevant provisions of the FMA Act or other applicable laws. Importantly, 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, indicating that these agreements have a relatively stable legal standing unless otherwise specified by law.