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 Workplace Authority, commencing upon signature of the second party.
The legislative authority under which the instrument is made
Section 31 of the FMA Act enables the Minister for Finance and Deregulation (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 Workplace Authority. 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 Workplace Authority 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 improve the Commonwealth's financial management practices, ensuring transparency, accountability, and compliance with financial management standards. This legislation was introduced to address the need for a robust framework to manage public funds effectively, thereby enhancing the efficiency and effectiveness of government operations. The Act empowers the Minister for Finance to enter into agreements with other Ministers to increase departmental appropriations by specific receipts, ensuring that agencies can utilise the revenue generated from activities such as the sale of surplus assets. The policy objective is to streamline financial management processes, allowing agencies to spend receipts without the need for additional parliamentary appropriations. The FMA Act is administered by the Parliament, reflecting its commitment to fiscal responsibility and accountability in government spending.
Scope and Application
The Financial Management and Accountability Act 1997 (FMA Act) provides the legislative framework for the Financial Management and Accountability Act 1997 Net Appropriation Agreement for the Workplace Authority. Under section 31 of the FMA Act, the Minister for Finance and Deregulation can enter into agreements with other Ministers for the purposes of items in Appropriation Acts that are marked "net appropriation." This allows departmental or administered appropriation items to be increased by amounts received by an agency as specified in the agreement. The instrument in question identifies the types of receipts that increase an existing appropriation for the Workplace Authority and 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. Notably, this agreement extends beyond the annual appropriation Acts, potentially lasting longer than a financial year, and can be cancelled or varied by the Finance Minister at any time without the consent of the other party. This instrument applies specifically to the Workplace Authority, and no further consultation was deemed necessary beyond providing drafts to the agency.
Key Provisions
Section 31 of the Financial Management and Accountability Act 1997 (FMA Act) provides the legislative authority for the Minister for Finance and Deregulation to enter into agreements with other ministers regarding appropriations that are marked as "net appropriation." These agreements, as detailed in the instrument, allow for the increase of departmental or administered appropriation items based on specified receipts received by an agency, as outlined in the agreement (section 31(1) and (2) FMA Act). The agreement in question pertains to the Workplace Authority and will continue until circumstances necessitate its renewal or amendment. Importantly, subsection 31(4) of the FMA Act empowers the Finance Minister to cancel or vary the agreement at any time without requiring consent from the other party.
The obligations imposed by this Act on the parties involved are primarily administrative in nature. The Workplace Authority, as the agency affected, must adhere to the terms of the agreement and ensure that any receipts specified are properly accounted for and utilised in accordance with the appropriation items increased by the agreement. The Minister for Finance and Deregulation, on the other hand, has the responsibility to monitor the agreement's implementation and has the authority to modify or terminate the agreement as needed. The Workplace Authority was consulted and provided with drafts of the instrument before finalisation, ensuring their agreement with the form of the instrument.
There are no specific offences, penalties, or civil/criminal consequences outlined in the explanatory statement for breaches of this agreement. However, any failure to comply with the terms of the agreement could potentially lead to financial mismanagement or misuse of public funds, which may attract scrutiny or corrective action under other provisions of the FMA Act or related financial management regulations. The instrument itself, being a legislative instrument, is not subject to the parliamentary disallowance and sunsetting provisions of the Legislative Instruments Act 2003, as detailed in subsections 44(2) and 54(2) of that Act.