Net Appropriation Agreement for the National Health and Medical Research Council (18/08/2006)

Overview

The Financial Management and Accountability Act 1997 (FMA Act) was enacted to provide a comprehensive framework for the financial management and accountability of Commonwealth entities, addressing the need for improved financial oversight and reporting mechanisms. This Act was introduced by the Parliament of Australia with a policy objective to ensure the efficient, economic and effective use of public resources and to enhance the accountability of Commonwealth entities. One aspect of the FMA Act is the provision under section 31, which allows the Minister for Finance to enter into agreements for “net appropriations” with other Ministers, facilitating the increase of departmental appropriation items by amounts received by specified agencies. The purpose of such agreements is to ensure that any receipts from specified activities, such as the sale of minor assets, are available for expenditure by the relevant agency without the need for additional appropriation by Parliament. This mechanism aids in the efficient use of funds and maintains the flexibility in financial management for agencies such as the National Health and Medical Research Council.

Scope and Application

The Financial Management and Accountability Act 1997 (FMA Act) authorises the Minister for Finance and Administration to enter into agreements regarding "net appropriations" with other Ministers for specified items in Appropriation Acts. These agreements allow for the increase of departmental or administered appropriation items by amounts received by an agency as outlined in the agreement. The instrument in question, the Net Appropriation Agreement for the National Health and Medical Research Council, specifies the types of receipts that can increase existing appropriations for the Council. The agreement, which can be for any period and is typically renewed as needed, is implemented through annual appropriation acts, which detail how the relevant appropriation items are increased according to the agreement. This mechanism ensures that certain receipts, such as those from the sale of minor assets like surplus office furniture and fittings, are available for expenditure by the Council without the need for further appropriation by Parliament. The agreement applies specifically to the National Health and Medical Research Council, which was consulted on the instrument's drafts and agrees with its form. As the instrument pertains to internal government operations, broader consultation was deemed unnecessary. Notably, agreements 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) under Section 31 allows the Minister for Finance and Administration to enter into agreements with other Ministers for the items in Appropriation Acts that are marked as "net appropriations" (Section 31(1)). These agreements enable departmental or administered appropriation items to be increased by specified amounts received by an agency (Section 31(2)). This means that if an agency sells minor assets such as surplus office furniture, the proceeds can be spent by the agency if the relevant appropriation item is increased accordingly (Section 31(2)). The agreements can be for any period, including periods longer than a financial year, and generally continue until circumstances require their renewal (Section 31(3)). The Minister has the authority to cancel or vary the agreement at any time without the consent of the other party (Section 31(4)). The instrument in question, the Net Appropriation Agreement for the National Health and Medical Research Council, identifies the types of receipts that increase an existing appropriation for the council (Purpose and operation of the instrument). This agreement is given effect by the annual Appropriation Acts, which increase the relevant departmental or administered appropriation item in accordance with the agreement (Purpose and operation of the instrument). The obligations under the Act require that the agency, in this case the National Health and Medical Research Council, be provided with drafts of the instrument before it is finalised, and that the agency agrees with the form of the instrument (Consultation). The instrument is for internal machinery of government purposes only, so no consultation with other persons is considered necessary (Consultation). There are no specified offences, penalties, or consequences for breach of the Net Appropriation Agreement as it is a legislative instrument that operates within the legislative framework established by the FMA Act. However, 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 (Additional Information).