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 National Archives of Australia, commencing 4 April 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 National Archives 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 National Archives 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 was enacted to ensure efficient and transparent management of public finances within Australian government agencies. This Act, passed by the Commonwealth Parliament, addresses the need for clear and effective financial accountability within the government by providing a framework for managing public funds. Specifically, Section 31 of the Act allows the Minister for Finance and Administration to enter into agreements with other ministers regarding "net appropriations," which are items in appropriation acts that are subject to increases based on specified receipts. The policy objective of this section is to facilitate the automatic adjustment of departmental appropriations to include additional revenue generated by the agencies, such as from the sale of minor assets, thereby ensuring that these funds can be utilised for intended purposes without requiring further appropriation by Parliament. The instrument detailed in the explanatory statement formalises an agreement for the National Archives of Australia, enabling it to account for certain receipts as part of its appropriation, thereby improving financial management and accountability within the agency.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) applies to the Minister for Finance and Administration and other Ministers in the Australian Commonwealth government, governing the agreements they can enter into for items marked as "net appropriation" in Appropriation Acts. This Act facilitates the augmentation of departmental or administered appropriation items by amounts received by specific agencies, as outlined in the relevant agreements. The scope of these agreements extends beyond a single financial year and can be cancelled or varied by the Finance Minister at any time without the consent of the other parties involved. The instrument in question, made under section 31 of the FMA Act, specifically pertains to the National Archives of Australia, detailing the types of receipts that augment its existing appropriations, thereby enabling the agency to utilise the proceeds from sales of minor assets such as surplus office furniture and fittings. This legislative framework ensures that such receipts are made available for departmental expenditure, subject to the stipulations within the annual Appropriation Acts and the agreement itself.
Key Provisions
The Financial Management and Accountability Act 1997 (FMA Act) section 31 allows the Minister for Finance and Administration to enter into agreements with other Ministers concerning items in Appropriation Acts that are marked “net appropriation” (section 31(1)). This means that these agreements can involve the reallocation of funds within the government, ensuring that certain receipts can be spent by the relevant agencies without additional appropriation by Parliament. The agreements are not bound to a specific Appropriation Act or financial year, providing flexibility in their duration (section 31(3)). Furthermore, the Finance Minister retains the authority to cancel or modify these agreements at any time without requiring consent from the other party (section 31(4)).
Under these agreements, the National Archives of Australia, as well as other affected agencies, can increase their departmental or administered appropriation items by the amounts received from specified activities, such as the sale of minor assets like surplus office furniture and fittings. This mechanism ensures that the funds generated from such activities are immediately available for expenditure by the relevant agency, thereby enhancing financial management and accountability within the government (section 10 of Appropriation Act (No.1) 2004-2005)). The National Archives of Australia was consulted during the drafting of the instrument and agrees with its form, as indicated in the explanatory statement.
Failure to adhere to the provisions outlined in the FMA Act and the specific appropriations agreements can result in serious consequences. While the explanatory statement does not detail specific offences or penalties, breaches of the FMA Act or related agreements may be subject to the general legal consequences applicable to breaches of statutory provisions. This could include financial penalties, legal action, or administrative sanctions, depending on the nature and severity of the breach. Given the importance of financial management and accountability within the government, adherence to these provisions is crucial to avoid any legal or administrative repercussions.