EXPLANATORY STATEMENT

Issued by the authority of the Minister for Finance and Deregulation

Financial Management and Accountability Act 1997

Determination 2009/20 to vary and abolish a Special Account

Purposes of Determination 2009/20

The attached instrument makes a determination under subsections 20 (2) and (3) of the Financial Management and Accountability Act 1997 (FMA Act) to vary and subsequently abolish the Other Trust Moneys – Defence Materiel Organisation Special Account.

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 may be 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 purposes specified in the determination.

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 the 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, such a determination is not subject to parliamentary disallowance.

Operation of Determination 2009/20

Reasons for varying the Special Account

The Other Trust Moneys – Defence Materiel Organisation Special Account is being abolished by this instrument because, as part of a program to simplify the financial framework, the purposes of separate Other Trust Moneys (OTM) and Services for other Governments and Non‑agency Bodies (SOG) Special Accounts are being combined within a single similar purpose Special Account - a Services for Other Entities and Trust Moneys (SOETM) Special Account.  The Other Trust Moneys – Defence Materiel Organisation Special Account is being varied to allow its balance to be transferred to the SOETM Special Account being established by Determination 2009/19, thereby making the OTM Special Account redundant.

Effect of this Determination

This Determination varies the Other Trust Moneys – Defence Materiel Organisation Special Account to allow its balance to be credited to the new Services for Other Entities and Trust Moneys – Defence Materiel Organisation Special Account.  There may therefore be two Special Accounts with the same purpose operating for a short period of time, until the balance is credited. Clause 4 of Determination 2009/20 provides that the Other Trust Moneys – Defence Materiel Organisation Special Account will be abolished when its balance reaches zero.

Consultation

The Defence Materiel Organisation is the agency affected by this instrument.  The agency was provided with drafts of the instrument 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).

Estimates of transactions on the Other Trust Moneys – Defence Materiel Organisation Special Account

1. Includes balance debited from the Other Trust Moneys – Defence Materiel Organisation Special Account and credited to the new Account.