Express law No. 64

10 January 2008

Important recent FMA Act amendments

On 1 January 2008, a series of amendments to the Financial
Management and Accountability Act 1997
(FMA Act) contained
in the Financial Framework Legislation Amendment Act
(No. 1) 2007
commenced. These amendments, together with some
others which commenced on assent (25 September 2007), made
some important changes to the FMA Act.

In particular, the amendments replace the existing
bilateral net appropriation agreements scheme with a
new regulations-based
scheme, clarify the Minister's capacity to make determinations
regarding the transfer of appropriations with agency functions
during machinery of government changes and simplify other
existing administrative processes.

A summary of the more significant amendments follows.
Unless otherwise indicated, the changes commenced on 1
January 2008.

Most significant changes

Section 31: New scheme for relevant agency receipts

Section 31 of the FMA Act, when read with s 10 of the
annual Appropriation Acts, permits certain amounts which
are received by an agency (such as receipts from the sale
of goods, or from the provision of services) to be added
to the agency's annual appropriation, and then spent
by the agency, without the further authorisation of Parliament.

Previously, s 31 required the Finance Minister (or delegate)
and the Minister responsible for each agency to reach agreement
about the receipts ('eligible receipts') which could be
covered by this arrangement. This has resulted in administrative
difficulties and variation across agencies.

The current bilateral net appropriation agreements scheme
is being replaced with a new scheme. The new scheme will
rely on regulations rather than agreements to give agencies
authority to spend amounts equivalent to prescribed receipts
they may collect. It is anticipated that a standard set
of regulations will set out the eligible receipts for all
agencies, with the possibility that specific regulations
may be made in relation to particular agencies where this
is necessary.

It should be noted that net appropriation agreements entered
into prior to commencement remain in effect until ended
by the Finance Minister.

Section 32: Transfer of appropriations with agency functions

Section 32 facilitates the orderly financing of functions
that are transferred between agencies (for example, as
a result of changes to the Administrative Arrangements
Orders or, in the case of the parliamentary departments,
in accordance with recommendations of the Presiding Officers).
It empowers the Finance Minister to give directions for
the transfer, from the losing agency to the gaining agency,
of part or all of the available appropriations necessarily
required for the performance of the particular function.

Section 32 has been redrafted to make it clear that the
minister may amend Appropriation Acts by determination
to transfer the actual appropriation from the losing agency
to the gaining agency, and not to simply provide the gaining
agency with access to the losing agency's appropriation.

This provision commenced on 25 September 2007, and has
already been extensively used to transfer appropriations
to new departments established under the recent changes
to the Administrative Arrangement Orders.

Other changes to FMA Act administrative processes

Sections 28 and 30: Repayments by or to the Commonwealth

Section 28 provides an appropriation for the repayment
of an amount received by the Commonwealth in circumstances
where the repayment is required or permitted by an Act
or other law, but where there would not be, but for s 28,
an appropriation for the repayment.

Section 30 allows for the converse situation, where an
amount is repaid to the Commonwealth after having been
paid out of the Consolidated Revenue Fund under the authority
of an appropriation. In these circumstances, s 30 operates
so that the appropriation has effect as if the amount had
not been paid out; that is, the amount repaid will be available
to be paid out again (subject to relevant time limits applying
to the appropriation).

Sections 28 and 30 have been redrafted to clarify how
the provisions apply to repayments by or to the Commonwealth.
In particular, the headings have been amended to more clearly
distinguish each provision. The amendment to s 30 also
makes it clear that the section applies to notional payments
within and between agencies.

Section 30A: Appropriations to take account of recoverable
GST

Section 30A essentially operates so that additional funds
are appropriated to account for GST if an agency makes
a creditable acquisition (within the meaning of the A
New Tax System (Goods and Services Tax) Act 1999) and pays
for that acquisition out of an appropriation which is limited
in amount (as opposed to, for example, a standing appropriation
which is not subject to any monetary limitation).

Section 30A has been amended to simplify and clarify when
GST liability arises in s 30A and when the adjustment to
an appropriation takes place.

Section 32A: Timing of adjustments to appropriations

Section 32A has been inserted to clarify the timing of
adjustments to appropriations subject to ss 20, 21, 30,
30A and 31 of the FMA Act. Adjustments subject to these
sections take effect when the adjustment is recorded in
the agency's accounts and records.

Section 53: Chief Executive may delegate powers

Section 53 is a delegation provision, enabling the Chief
Executive to delegate powers conferred on the Chief Executive
by the FMA Act, or powers delegated to the Chief Executive
by the Finance Minister. It has been amended to provide
that a Chief Executive may issue binding directions to
any official in relation to a power delegated or subdelegated
to that official by the Chief Executive. This provision
commenced on 25 September 2007.

For further information please contact:

Kathryn Graham
Senior General Counsel
T 02 6253 7167 F 02 6253 7304
kathryn.graham@ags.gov.au

Danielle Chifley
Counsel
T 02 6253 7581 F 02 6253 7304
danielle.chifley@ags.gov.au

Marlowe Thompson
Counsel
T 02 6253 7580 F 02 6253 7304
marlowe.thompson@ags.gov.au

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