ATTACHMENT

Details of the Financial Management and Accountability Amendment Regulation 2013 (No. 1)

 

Section 1 - Name of Regulation

 

This section provides that the title of the Regulation is the Financial Management and Accountability Amendment Regulation 2013 (No. 1), as made under section 65 of the Financial Management and Accountability Act 1997 (the FMA Act).

 

Section 2 - Commencement

 

This section provides that the amendments in the Regulation commence on two dates.  The amendment in sections 1 to 4 and Schedule 1 commence on the day after the Regulation is registered on the Federal Register of Legislative Instruments.  The amendments in Schedule 2 commence on 1 June 2013. 

 

Section 3 - Authority

 

This section provides that the Regulation is made under the FMA Act.

 

Section 4 - Schedule(s)

 

This section provides that the Financial Management and Accountability Regulations 1997 (the Principal Regulations) are amended as set out in Schedules 1 and 2 to the Regulation.

 

Schedule 1 - Amendments commencing on day after registration

Item [1] - Item 181 of Schedule 1 (including the note)

This item amends Schedule 1 to the Principal Regulations by removing Wheat Exports Australia (item 181) from the list of agencies prescribed for the purposes of the FMA Act.

The Wheat Export Marketing Amendment Act 2012 wound-up Wheat Exports Australia on 31 December 2012.  That amendment gave effect to the Government's response to a Productivity Commission review on wheat export marketing arrangements that was tabled in Parliament on 28 October 2010. 

Item [2] - Item 410.004 of Schedule 1AA  

This item makes a minor amendment to item 410.004 in Part 4 of Schedule 1AA to add the word 'and' to the objective statement for that item.  This amendment clarifies that financial management programs run by the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) are intended to improve the financial resilience of vulnerable individuals and to alleviate the immediate impact of financial stress.

The objective statement for item 410.004 is reworded to make clear that this item covers the range of initiatives aimed at:

*         improving the financial knowledge, skills, capabilities and financial resilience of vulnerable individuals and families; and

*         alleviating the immediate impact of financial stress.

The objective also covers initiatives in relation to problem gambling, funding for research and stakeholder engagement and funding to peak bodies and other stakeholder organisations.

For more information on financial management programs see page 67 of the 2012-13 Budget Related Paper Number 1.8 Families, Housing, Community Services and Indigenous Affairs.

 

Item [3] - Item 410.008 of Schedule 1AA

This item makes a minor amendment to another FaHCSIA spending activity, Allowances, Concession and Services for Seniors, in item 410.008 of Part 4 of Schedule 1AA.  The amendment clarifies that the objective of this spending activity is to make payments and provide services to senior Australians for three purposes:

*         to assist senior Australians with household expenses;

*         to enable them to maintain their standard of living; and

*         to increase their access to information and community resources.

This item clarifies that the three purposes of this spending activity can be considered as alternatives.

For more information on Allowances, Concession and Services for Seniors see page 86 of the 2012-13 Budget Related Paper Number 1.8 Families, Housing, Community Services and Indigenous Affairs.

 

Item [4] - Item 426.001 of Schedule 1AA

This item amends item 426.001 in Part 4 of Schedule 1AA to establish authority for the Government to make, vary or administer arrangements for the Superannuation Consumer Centre.  The amendment supports the Government's Superannuation Consumer Centre -- investment fund measure announced in the 2012-13 Mid-Year Economic and Fiscal Outlook.

The measure provides grant funding of $10 million to the Superannuation Consumer Centre.  For further information about the Superannuation Consumer Centre, see
page 280 of 2012-13 Mid-Year Economic and Fiscal Outlook.

 

Schedule 2 - Amendments commencing on 1 June 2013

Items [1] to [5] - Regulation 3A: Amendments to the definition of "grant"

These items make changes to the definition of "grant" in regulation 3A of the Principal Regulations.  The changes are intended to support the issue by the Finance Minister of updated Commonwealth Grant Guidelines (CGGs) that will come into effect from 1 June 2013. 

The CGGs are a legislative instrument issued by the Finance Minister under section 64 of the FMA Act and regulation 7A of the Principal Regulations.  The CGGs provide FMA Act Agencies with guidance on:  grant policies and processes; requirements regarding entering into grants and the publication of grant details. 

Since the CGGs were first issued in July 2009 there have been legislative and policy changes which have had an impact on grants.  In addition to addressing these changes, the updated CGGs will also address the recommendations of three recent Australian National Audit Office (ANAO) performance audit reports and a Joint Committee of Public Accounts and Audit (JCPAA) Report.  Those reports were:

*         ANAO Performance Audit Report No. 36 2011-12, Development and Approval of Grant Program Guidelines (tabled on 30 May 2012);

*         ANAO Performance Audit Report No. 21 2011-12, Administration of Grant Reporting Obligations (tabled on 24 January 2012);

*         ANAO Performance Audit Report No. 7 2011-12, Establishment, Implementation and Administration of the Infrastructure Employment Projects Stream of the Jobs Fund (tabled on 22 September 2011); and

*         JCPAA Report 430 (tabled on 21 May 2012), which reviews ANAO Reports No. 7 and No. 21 of 2011-12.

In order for the Finance Minister to issue updated CGGs, it is necessary to amend the definition of "grant" in regulation 3A of the Principal Regulations.  Subregulation 3A(1) describes the types of arrangements that are grants, and so will be subject to the CGGs.  Subregulation 3A(2) specifies arrangements that could be covered by the definition of a grant in subregulation 3A(1), however, because these arrangements are subject to other rules and requirements, they are excluded from being treated as a grant for the purposes of the Principal Regulations.

The amendments in items 1 to 3 are related.  Currently paragraph 3A(2)(b) excludes a gift of public money (including an ex gratia payment) from the definition of grant.  However, to ensure transparency around these types of arrangements, paragraph 3A(2)(b) is repealed and replaced (item 3) so that gifts of public money come within the definition of a grant in subregulation 3A(1).  Items 1 and 2 amend subregulation 3A(1) to ensure that gifts of public money (including
ex gratia payments) are covered by the definition of a grant, to ensure that these payments are subject to the reporting requirements in the CGGs.

 

Items 1 and 2 amends the criteria for a grant in subregulation 3A(1) to recognise that a grant that is a gift or an ex gratia payment may not always be:

*         intended to promote one or more of the Australian Government's policy objectives: existing paragraph 3A(1)(c); or

*         subject to terms and conditions specified in an arrangement: existing paragraph 3A(1)(d). 

Item 1 amends paragraph 3A(1)(c) so that the definition of a grant is the provision of financial assistance which is simply intended to help address one or more of the Australian Government's policy objectives.

Item 2 amends paragraph 3A(1)(d) to ensure that the definition of a grant includes arrangements to provide financial assistance that are not subject to any terms and conditions (for example, gifts of public money).

Items 3 to 5 amend the categories of arrangements in subregulation 3A(2) that are taken not to be grants.  In particular these amendments:

*         remove the exemption currently in paragraph 3A(2)(b) which excludes gifts of public property and gifts of public money (including ex gratia payments) from the definition of a grant;

*         clarify that an act of grace payment is not a grant in new paragraph 3A(2)(b);

*         clarify the types of compensation payments that are not grants in amended paragraph 3A(2)(c);

*         clarify the types of benefits or entitlements that are not grants in amended paragraph 3A(2)(d); and

*         clarify that investments or loans are not grants in amended paragraph 3A(2)(f).

It is not necessary for existing paragraph 3A(2)(b) to exclude gifts of public property from the definition of a grant as a grant is defined in regulation 3A(1) as only applying to arrangements under which public money is to be paid (and not public property).  Furthermore, gifts of public property are covered by section 43 of the FMA Act.  To this end, item 5 adds another note to subregulation 3A(2) to advise readers that gifts of public property are not grants and are instead subject to section 43 of the FMA Act.

Item 3 clarifies in new paragraph 3A(2)(c), that the types of compensation payments that are not grants include:

*         arrangements relating to defective administration (this includes a payment made under the Scheme for Compensation for Detriment Caused by Defective Administration or other similar compensation schemes);

*         arrangements relating to employment conditions; and

*         other arrangements established by legislation.

An act of grace payment is currently excluded from the definition of grant in existing subparagraph 3A(2)(c)(i).  However, as act of grace payments differ from the compensation payments described in new paragraph 3A(2)(c), item 3 proposes to list act of grace payments as a separate category of payment that is not a grant in new paragraph 3A(2)(b).

Item 3 also amends paragraph 3A(2)(d) to clarify the types of entitlements or benefits that are excluded from the definition of a grant.  Where the criteria for paying an entitlement or benefit is established by legislation, these payments will not be grants for the purpose of the Principal Regulations (for example, payments under the social security or veterans' entitlements legislation).  Payments made according to administrative guidelines will be grants for the purpose of the Principal Regulations and will not be excluded by paragraph 3A(2)(d). 

As a result of the High Court's decision in Williams v Commonwealth [2012] HCA 23, many payments that are made according to administrative guidelines now require legislative authority to support those payments.  For example, section 32B of the FMA Act and Schedule 1AA of the Principal Regulations provide authority for the Government to engage in a wide variety of spending activities.  However, these provisions in the FMA Act and Principal Regulations only establish legislative authority to make, vary or enter arrangements to provide financial assistance, the legislative authority does not establish a payment to a person of a benefit or entitlement covered by paragraph 3A(2)(d).  Payments authorised by these provisions will continue to be grants subject to the CGGs.

Item 4 makes a minor amendment to paragraph 3A(2)(f) to remove an unnecessary reference to public money.  Subregulation 3A(1) defines a grant to be an arrangement for the provision of financial assistance by the Commonwealth under which public money is to be paid.  It is therefore not necessary for paragraph 3A(2)(f) to specify that an investment or loan is excluded from the definition of a grant if it is an investment or loan of public property.  The new paragraph would simply provide that an arrangement is not a grant if it is an investment or loan.