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 Office of the Renewable Energy Regulator, commencing 26 May 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 Office of the Renewable Energy Regulator. 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 Office of the Renewable Energy Regulator 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, enacted by the Parliament of Australia, was introduced to address the need for efficient and accountable financial management within the federal government. This legislation provides a framework for the financial administration of Commonwealth entities, aiming to ensure that public funds are managed responsibly and transparently. Section 31 of the FMA Act, under which the referenced instrument was made, specifically enables the Minister for Finance and Administration to enter into agreements with other Ministers concerning items in Appropriation Acts marked as "net appropriation". These agreements allow for the increase of departmental or administered appropriation items by specified receipts, facilitating more flexible financial management and ensuring that agencies can utilise received funds effectively without requiring additional parliamentary appropriation. The policy objective of this section is to streamline the financial processes and enhance the accountability of government spending.
Scope and Application
The Net Appropriation Agreement for The Office of the Renewable Energy Regulator, made under section 31 of the Financial Management and Accountability Act 1997, specifically applies to the transactions and receipts of the Office of the Renewable Energy Regulator. This agreement enables the Office to increase its existing appropriation by the amounts received from specified activities, such as the sale of minor assets like surplus office furniture and fittings, without the need for further appropriation by Parliament. The agreement operates through the annual Appropriation Acts, which provide that the relevant departmental appropriation item is increased in accordance with the agreement, thereby allowing the received funds to be spent by the agency. The agreement is not subject to parliamentary disallowance and sunsetting provisions, as outlined in the Legislative Instruments Act 2003, and it remains in effect for as long as the relevant specific provisions exist in the annual Appropriation Acts.
Key Provisions
The instrument under section 31 of the Financial Management and Accountability Act 1997 (FMA Act) is a Net Appropriation Agreement for The Office of the Renewable Energy Regulator, which commenced on 26 May 2005. Section 31 of the FMA Act empowers the Minister for Finance and Administration to enter into agreements with other ministers for items in Appropriation Acts marked as “net appropriation”. These agreements allow for departmental appropriation items to be increased by specified amounts received by an agency, as outlined in the agreement. For example, this could include the sale of minor assets like surplus office furniture and fittings, with the proceeds being available for expenditure by the agency.
The obligations imposed by this Act on the parties involved are primarily procedural and require adherence to the terms set out in the agreement. The Finance Minister can enter into such agreements without the need for parliamentary approval, but these agreements can be cancelled or varied at any time without the consent of the other party. This flexibility allows for adjustments to be made as circumstances change. Furthermore, the Act specifies that the agreement need not be tied to a particular Appropriation Act or financial year, providing a broader scope for the agreement’s duration.
In terms of consequences for non-compliance or breaches, the Act does not explicitly outline specific civil or criminal penalties for breaches of these agreements. However, the authority to cancel or vary an agreement at any time indicates a strong mechanism for enforcement and compliance. The lack of specific penalties in this context may reflect the internal nature of these agreements, which are primarily designed to streamline financial management within government agencies. The absence of parliamentary disallowance and sunsetting provisions further underscores the streamlined nature of these agreements, as noted under the Legislative Instruments Act 2003.