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 Workplace Services commencing on the later of;
1. The Finance Minister issuing a direction under section 32 of the FMA Act transferring some or all of the departmental appropriation for the Department of Employment and Workplace Relations (DEWR) to the agency; and
2. Registration of this instrument 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 Office of Workplace Services. 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 Workplace Services 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 ensure effective financial management and accountability within the Australian government. The Act provides the framework for managing public money and ensuring transparency and accountability in government spending. The FMA Act addresses the problem of ensuring that funds are only used for the purposes for which they were allocated, while also allowing for flexibility in the use of funds where appropriate. The Act was passed by the Australian Parliament and aims to improve the management of public finances by ensuring that funds are used efficiently and effectively. The Net Appropriation Agreement for the Office of Workplace Services is an instrument made under section 31 of the FMA Act, which enables the Minister for Finance and Administration to enter into agreements with other Ministers for the purposes of items in Appropriation Acts that are marked "net appropriation". The agreement allows for the increase of departmental or administered appropriation items by amounts received by an agency as specified in the agreement, enabling the receipts to be spent by the agency.
Scope and Application
The instrument described pertains to a Net Appropriation Agreement made under section 31 of the Financial Management and Accountability Act 1997 (FMA Act), specifically for the Office of Workplace Services. This agreement applies to the agency in question, allowing it to increase its appropriation by the amounts it receives from certain specified transactions, such as the sale of minor assets. The agreement comes into effect upon the issuance of a direction by the Minister for Finance and Administration under section 32 of the FMA Act, transferring some or all of the departmental appropriation for the Department of Employment and Workplace Relations (DEWR) to the Office of Workplace Services, and upon the registration of the instrument on the Federal Register of Legislative Instruments. The agreement can be for any period, including beyond a financial year, and can be cancelled or varied by the Minister at any time. The instrument operates by aligning with specific provisions within the annual Appropriation Acts, which determine the types of receipts that can increase the existing appropriation for the agency, thereby allowing these receipts to be spent by the agency. As the instrument is designated for internal government machinery and does not require consultation with external parties, the Office of Workplace Services was the sole entity consulted and agrees with the instrument's form.
Key Provisions
The main operative sections of the instrument (the instrument) are found in Section 31 of the Financial Management and Accountability Act 1997 (FMA Act). Section 31 allows the Minister for Finance and Administration (the Finance Minister) to enter into agreements with other Ministers for items in Appropriation Acts marked as “net appropriation”. These agreements allow for the increase of departmental or administered appropriation items by amounts received by an agency as specified in the agreement. This is particularly relevant for the Office of Workplace Services, as it enables the agency to spend certain receipts without requiring further appropriation by Parliament.
Under the instrument, the obligations and requirements imposed on the parties, specifically the Finance Minister and the Minister for the Office of Workplace Services, include the establishment of the terms and conditions under which certain receipts can be utilised by the Office of Workplace Services. The instrument details the types of eligible receipts that can increase the existing appropriation for the Office of Workplace Services. The agreement is given effect by specific provisions within the annual Appropriation Acts, which detail how the relevant departmental or administered appropriation item is increased according to the agreement. This ensures that the agency can spend the receipts without further appropriation.
There are no specific offences, penalties, or civil/criminal consequences outlined in the instrument for breach of the agreement. However, Subsection 31(4) of the FMA Act provides that the Finance Minister may cancel or vary an agreement at any time without the consent of the other party. This highlights the flexibility and control the Finance Minister has over the agreement, ensuring that any breaches or changes in circumstances can be addressed promptly.
In summary, the instrument under Section 31 of the FMA Act facilitates the agreement between the Finance Minister and the Minister for the Office of Workplace Services, enabling the agency to utilise certain receipts without further appropriation by Parliament. The obligations and requirements are detailed within the instrument and are given effect by specific provisions in the annual Appropriation Acts. The instrument ensures that the Office of Workplace Services can manage its finances more effectively while maintaining the flexibility to address any changes in circumstances.