EXPLANATORY STATEMENT

Issued by the authority of the Minister for Finance and Administration

Financial Management and Accountability Act 1997

Determination 2006/21 to vary and abolish Special Accounts

Purposes of Determination 2006/21

The attached instrument makes a determination under section 20 of the Financial Management and Accountability Act 1997 (FMA Act) to vary and subsequently abolish two Federation Fund Accounts.

Special Accounts generally

In accordance with the Constitution, all revenues or moneys raised or received by the Government of the Commonwealth form one Consolidated Revenue Fund (CRF) and may not be spent unless under an appropriation by the Parliament for the purposes of the Commonwealth.  A Special Account is established by a determination that sets out the amounts that may be credited and the purposes for which it may be debited. Special Accounts established by determination are supported by an appropriation under section 20 of the FMA Act.  In effect, Special Accounts allow amounts from the CRF to be spent on a purpose specified in the Special Account.

Determinations that establish Special Accounts, or vary determinations that establish Special Accounts, are subject to section 22 of the FMA Act. Section 22 of the FMA Act requires the Finance Minister to table a copy of the establishing or varying determination in each House of Parliament. Either House may disallow a determination within five sitting days of tabling.  If the determination is not disallowed, it comes into effect on the calendar day after the last day on which it could have been disallowed.

Regulation 10 of the Legislative Instruments Regulations 2004 preserves the disallowance provisions under section 22 of the FMA Act by exempting Special Account determinations from subsections 57(2) and 57(5) of the Legislative Instruments Act 2003.

Special Accounts can be abolished by a determination of the Finance Minister.  However, there is no requirement to table such a determination.

Operation of Determination 2006/21

Purpose of the Federation Fund Account

Two new Special Accounts (‘the new Accounts’) are being established. They are the:

·                    Federation Fund - Department of Communications, Information Technology and the Arts Special Account; and

·                    Federation Fund - Department of Transport and Regional Services Special Account.

The new Accounts are required in order to give effect to changes that are required to the Federation Fund Accounts, but which are not practical to make by variation to the establishing determination (Determination number 1998/10) due to the way in which it is structured.

The current purpose of each Federation Fund Accounts is:

For expenditure on substantial capital projects throughout Australia which will mark the centenary of Federation and make a significant and lasting contribution to the Australian Community.

Changes required

A clause has been inserted to allow amounts to be debited from each Federation Fund Account and credited to the corresponding new Accounts.

Limitations in the structure of Determination number: 1998/10

Determination number: 1998/10 established Federation Fund Accounts for eight agencies. Five of the Federation Fund Accounts have since been abolished but three Federation Fund Accounts, operated by the Department of Communications, Information Technology and the Arts, the Department of Education, Science and Training and the Department of Transport and Regional Services are still in use.

It is not practical to vary Determination number: 1998/10, the establishing determination signed by the delegate of the Minister for Finance and Administration on 9 November 1998. This is because the format of the determination constrains the amount of information that can be included. Accordingly, new Accounts are being established (Determinations 2006/22 and 2006/23) to provide for the continuation of the activities of the Federation Fund Accounts, the incorporation of the necessary changes, and to ensure that the determination is as clear and informative as possible.

Effect of this determination

The Federation Fund Accounts are being varied by this determination (Determination 2006/21) to enable their balances to be credited to the new Accounts.  Once the balance of a Federation Fund Account reaches zero, clause 3 of the determination will abolish that Federation Fund Account.

Consultation

The Department of Communications, Information Technology and the Arts and the Department of Transport and Regional Services are the agencies affected by this instrument. Both agencies were provided with drafts of the instrument before it was finalised and agree 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).

Estimates of transactions on the Federation Fund Accounts

1. Balance debited from the Department of Communications, Information Technology and the Arts’ Federation Fund Account and credited to the Federation Fund - Department of Communications, Information Technology and the Arts Special Account.

2. Balance debited from the Department of Transport and Regional Services’ Federation Fund Account and credited to the Federation Fund - Department of Transport and Regional Services Special Account.