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 Workplace Ombudsman, 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 Office of the Workplace Ombudsman. 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 Workplace Ombudsman 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 address the need for improved financial management and accountability within the Australian government. This legislation aims to ensure that government funds are used efficiently, effectively, and in accordance with the law. The FMA Act was introduced by the Australian Parliament, reflecting a policy objective to establish a robust framework for the financial management of Commonwealth entities. Under this Act, section 31 agreements for "net appropriations" were created to allow for the automatic adjustment of appropriations based on certain receipts, facilitating the use of funds by agencies without requiring additional parliamentary approval for each transaction. The Net Appropriation Agreement for the Office of the Workplace Ombudsman, for example, enables the agency to spend funds received from the sale of surplus assets, thereby enhancing operational efficiency and financial flexibility within the constraints of existing appropriations.
Scope and Application
The Net Appropriation Agreement for the Office of the Workplace Ombudsman, established under section 31 of the Financial Management and Accountability Act 1997, applies specifically to the Office of the Workplace Ombudsman and governs the financial management of certain receipts within this agency. This Act allows the Minister for Finance and Administration to enter into agreements that increase existing appropriations based on specific receipts, such as the proceeds from the sale of minor assets like surplus office furniture and fittings. This agreement ensures that such receipts can be utilised for expenditure by the Office of the Workplace Ombudsman without the need for additional appropriation by Parliament. The agreement can be for any period, including beyond a financial year, and is subject to renewal if necessary. The agreement is facilitated by specific provisions in the annual Appropriation Acts, which detail the types of eligible receipts and their application. Importantly, this instrument does not require consultation beyond the Office of the Workplace Ombudsman, as it is intended for internal government purposes, and 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 provides the framework for agreements concerning "net appropriations" for certain departments and agencies. These agreements, such as the Net Appropriation Agreement for the Office of the Workplace Ombudsman, allow for an increase in departmental appropriations by amounts received by the agency as specified in the agreement. This is particularly useful for agencies that generate revenue through the sale of surplus assets, such as office furniture and fittings, without the need for additional parliamentary appropriation. The agreement can be for any period, including beyond a financial year, and can be varied or cancelled by the Minister for Finance and Administration at any time.
Under the FMA Act, section 31, the Minister for Finance and Administration has the authority to enter into agreements with other ministers for items in Appropriation Acts marked as "net appropriations". These agreements are formalised in the annual Appropriation Acts, which detail the specific provisions that give effect to the agreements. For example, section 10 of the Appropriation Act (No.1) 2004-2005 includes such provisions. The purpose of these agreements is to ensure that the revenue generated by the sale of surplus assets is available for expenditure by the agency without requiring additional parliamentary approval.
The obligations imposed by the Act on the parties involved include the requirement that the agreements be made in accordance with the provisions set out in the Appropriation Acts. The Office of the Workplace Ombudsman, as the affected agency, must adhere to the terms of the agreement to ensure that the receipts are correctly allocated and used as specified. Furthermore, the Minister for Finance and Administration has the discretion to modify or cancel the agreement at any time, providing flexibility in managing the appropriations.
Failure to comply with the provisions of the FMA Act or the terms of the agreement may result in significant consequences. However, the explanatory statement does not detail specific offences or penalties for breaches of the agreement. Given that agreements under section 31 of the FMA Act are not subject to the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003, it is important for all parties to ensure strict adherence to the terms of the agreement to avoid any potential legal or financial repercussions.