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 upon registration on the Federal Register of Legislative Instruments.
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 provide a framework for the management and accountability of financial resources within the Australian government. This Act was introduced to address the need for a cohesive and transparent system to manage government funds effectively. The FMA Act is overseen by the Parliament of Australia and aims to ensure that public money is used efficiently, economically, effectively, and ethically. Under Section 31 of the FMA Act, the Minister for Finance and Administration can enter into agreements with other Ministers to facilitate the increase of appropriations for specific items in Appropriation Acts that are marked as "net appropriation." This allows agencies to retain and spend certain receipts, such as the proceeds from the sale of minor assets, without requiring additional appropriation by Parliament. This mechanism is essential for ensuring that government agencies can operate within the financial constraints while also maintaining flexibility in their expenditure.
Scope and Application
The instrument described pertains to the Financial Management and Accountability Act 1997, specifically addressing agreements for "net appropriations" in relation to the Federal Court of Australia. Under section 31 of the FMA Act, the Minister for Finance and Administration can enter into agreements with other Ministers concerning items in Appropriation Acts that are marked as "net appropriation." These agreements allow for the increase of departmental or administered appropriation items by amounts received by an agency, as specified in the agreement. The instrument identifies the types of receipts that can increase existing appropriations for the Federal Court of Australia and is given effect by the annual Appropriation Acts, which provide that the relevant appropriation items are increased in accordance with the agreement. This allows the receipts to be spent by the agency, such as amounts received from the sale of minor assets like surplus office furniture and fittings. The instrument only has effect while specific provisions exist in the annual Appropriation Acts, and eligible receipts are outlined in clause 5.1 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 Financial Management and Accountability Act 1997 (FMA Act) provides a framework for the management of government finances, and section 31 of the Act specifically deals with agreements for "net appropriations". Section 31 allows the Minister for Finance and Administration to enter into agreements with other Ministers regarding items in Appropriation Acts marked as "net appropriation". These agreements permit the increase of departmental appropriation items by amounts received by an agency, as specified in the agreement. For example, if a government agency sells minor assets such as surplus office furniture, the proceeds from these sales can be spent by the agency, provided the relevant agreement is in place. Without such an agreement, the proceeds from the sale would not be available for agency expenditure without further appropriation by Parliament.
The obligations imposed by section 31 on the parties involved are significant. The Finance Minister has the authority to enter into these agreements and can cancel or vary them at any time without the consent of the other party. This flexibility ensures that the agreements can be adapted to changing circumstances. The annual Appropriation Acts provide the legislative foundation for these agreements, specifying how departmental or administered appropriation items are increased in accordance with the agreement. The affected agencies, such as the Federal Court of Australia in this case, must comply with the terms of the agreement to ensure that eligible receipts are appropriately accounted for and available for expenditure.
Breach of the obligations outlined in the agreements made under section 31 of the FMA Act could lead to serious consequences. While specific offences, penalties, or consequences are not detailed in the explanatory statement, it is clear that failure to adhere to the terms of the agreement could result in financial mismanagement or misuse of appropriated funds. The Legislative Instruments Act 2003 notes that agreements under section 31 are not subject to the parliamentary disallowance and sunsetting provisions, indicating a level of autonomy and permanence in these agreements. Any failure to comply with the terms could potentially be subject to scrutiny by relevant authorities, though the exact civil or criminal consequences are not specified in the explanatory statement.