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 Migration Review Tribunal and the Refugee Review Tribunal, commencing 1 July 2006
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 Review Tribunal and the Refugee Review Tribunal. 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 Review Tribunal and the Refugee Review Tribunal 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 establish a robust framework for the management and accountability of public finances in Australia. This Act addresses the need for clear and effective financial management practices within the federal government, ensuring that public funds are allocated, managed, and accounted for in a transparent and efficient manner. Enacted by the Parliament of Australia, the FMA Act aims to provide a comprehensive set of rules and procedures that support good governance and fiscal responsibility. One of its key provisions allows the Minister for Finance and Administration to enter into agreements with other Ministers regarding items marked as "net appropriation" in Appropriation Acts, facilitating the adjustment of departmental appropriations based on specified receipts. This mechanism helps ensure that agencies can effectively utilise additional funds received from activities such as the sale of surplus assets, without requiring additional parliamentary appropriation.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) provides a framework for the management of government finances and establishes mechanisms for accountability and control over the use of public funds. Section 31 of the FMA Act specifically allows the Minister for Finance and Administration to enter into agreements with other Ministers regarding "net appropriations," which are appropriations marked in Appropriation Acts. These agreements enable the Finance Minister to increase departmental appropriation items by amounts received by an agency as specified in the agreement. This arrangement is designed to enhance the financial flexibility of agencies, allowing them to utilise certain receipts without additional appropriation by Parliament. The instrument in question pertains to the Migration Review Tribunal and the Refugee Review Tribunal, and it facilitates the use of receipts such as proceeds from the sale of minor assets for departmental expenditure. The agreement is effective as long as corresponding provisions exist in the annual Appropriation Acts and may continue beyond a financial year. The Finance Minister retains the authority to cancel or vary these agreements at any time.
Key Provisions
The main operative sections of the Financial Management and Accountability Act 1997 (FMA Act) that are relevant to the instrument (section 31) pertain to agreements for “net appropriations”. Section 31 of the FMA Act allows the Minister for Finance and Administration to enter into agreements with other Ministers to increase departmental appropriations by amounts received by an agency, as specified in the agreement (section 31(1)). These agreements can cover any period, including periods longer than a financial year, and can be varied or cancelled by the Finance Minister at any time without the consent of the other party (section 31(3) and (4)). The purpose of the instrument is to identify the types of receipts that increase existing appropriations for the Migration Review Tribunal and the Refugee Review Tribunal. 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, thereby enabling the receipts to be spent by the agency (section 31(1)).
The obligations and requirements imposed by the Act on the parties or entities it governs are primarily concerned with ensuring that the net appropriation agreements are properly managed and implemented. The Finance Minister must enter into the agreement in accordance with the provisions of section 31 of the FMA Act, and the relevant tribunals must adhere to the terms of the agreement in order to increase their appropriations by the specified amounts. The annual Appropriation Acts must include specific provisions that give effect to the instrument, and the eligible receipts covered by the instrument are set out in clause 5.1 of the instrument. The Review Tribunal and the Refugee Review Tribunal, as the agencies affected by this instrument, were provided with drafts of the instrument before it was finalised and have agreed with its form.
The instrument does not specify any offences, penalties, or civil or criminal consequences for breach. However, it is worth noting that 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). This means that the agreements are not subject to the same scrutiny and oversight as other legislative instruments, and may remain in effect indefinitely unless they are cancelled or varied by the Finance Minister. It is important for the parties involved to ensure that the agreements are properly managed and implemented in order to avoid any potential issues or complications.