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 Federal Court of Australia, commencing 29 June 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 Federal Court of Australia. 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 Federal Court of Australia 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 ensure effective financial management and accountability within the Australian Government. It provides a legislative framework for the handling of public funds and the processes for appropriation and expenditure. The Act was introduced to address the need for clear guidelines and accountability in the management of government finances, ensuring that public funds are used efficiently and responsibly. Enacted by the Australian Parliament, the Act includes various provisions designed to maintain transparency and control over government spending. One of the key policy objectives of the Act is to facilitate the proper allocation and use of appropriations, which includes the mechanism for agreements related to "net appropriations" as outlined in Section 31 of the Act. These agreements allow certain receipts to be added to existing appropriations, ensuring that funds received from specific activities, such as the sale of minor assets, are available for departmental expenditure without the need for further appropriation by Parliament.
Scope and Application
The instrument to which this explanatory statement relates is an agreement made under section 31 of the Financial Management and Accountability Act 1997, specifically for the Federal Court of Australia, effective from 29 June 2005. This agreement pertains to the use of "net appropriations," allowing the Federal Court to increase its existing appropriations by certain specified receipts without the need for additional parliamentary appropriation. Section 31 of the FMA Act empowers the Minister for Finance and Administration to enter into such agreements with other Ministers, enabling departments or agencies to use receipts from activities like the sale of minor assets for their intended purposes. The agreement can be for any period, including beyond a single financial year, and can be varied or cancelled by the Minister at any time. The instrument only applies to the Federal Court and operates in conjunction with specific provisions in the annual Appropriation Acts. The Court was consulted during the drafting process and agrees with the instrument’s form. Notably, agreements under section 31 of the FMA Act are exempt from the parliamentary disallowance and sunsetting provisions outlined in the Legislative Instruments Act 2003.
Key Provisions
The instrument under the Financial Management and Accountability Act 1997 (FMA Act) enables the Minister for Finance and Administration to enter into agreements concerning "net appropriations" with other Ministers (section 31). These agreements specify how certain receipts increase the appropriations for particular items in Appropriation Acts. Such agreements are not limited to a specific financial year and can continue until circumstances require renewal (subsection 31(3)). The Minister also has the authority to cancel or vary these agreements at any time without needing consent from the other party (subsection 31(4)).
The primary obligation under this Act is for the Finance Minister to enter into agreements that facilitate the use of receipts for specified purposes. These agreements are intended to ensure that funds received by agencies, such as from the sale of minor assets like surplus office furniture, are available for departmental expenditure without requiring additional appropriations from Parliament. The agreements are implemented through specific provisions in the annual Appropriation Acts, ensuring that the relevant appropriation items are increased accordingly.
Breaches of the provisions under this Act are not explicitly detailed in the explanatory statement. However, the agreements themselves are intended to ensure compliance with financial management practices by ensuring that receipts are properly accounted for and utilised. Failure to adhere to the terms of the agreement could result in misuse of funds or non-compliance with financial regulations. The explanatory statement does not detail specific penalties, but it is implied that any mismanagement or improper use of funds could lead to financial mismanagement and accountability issues.
The explanatory statement clarifies that these agreements are not subject to the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003. This means that once established, these agreements do not require parliamentary approval for their continued operation or for their eventual termination. This is specified under items 19 in subsection 44(2) and item 17 in subsection 54(2) of the Legislative Instruments Act 2003. The Federal Court of Australia, the agency affected by this instrument, was consulted and agrees with its form, ensuring that it meets the necessary internal machinery of government requirements.