Northern Territory Second Reading Speeches

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FINANCIAL MANAGEMENT AMENDMENT BILL 2009

Madam Speaker, I move that the bill be now read a second time.

The purpose of this bill is to amend the
Financial Management Act to reflect the view the federal financial arrangements as a result of the inter-governmental agreement signed at COAG in November 2008.

The new agreements reduce a number of Special Purpose Payments from almost 100 to five, and introduce a new type of funding called National Partnerships that promote reform and innovation in service delivery. This agreement also streamlines funding arrangements between the Commonwealth and the States and the Territories.


Under previous arrangements, tied Commonwealth funding was paid by Commonwealth Line Agencies directly to state and territory line agencies. With the new arrangements, funding in the form of Specific Purpose Payments and National Partnership Agreements will be paid by the Commonwealth Treasury to State and Territory treasuries. The payments will then be on-passed to relevant line agencies.


In order to achieve the most appropriate mechanism to implement the new arrangements, a review was undertaken of the Territory’s financial management framework and the associated provisions of the
Financial Management Act. Consistent with the approach adopted by other jurisdictions, tied funding from the Commonwealth with now be received into the Central Holding Authority and paid to the agencies in the form of an appropriation.

In order to facilitate this change, a new appropriation purpose termed ‘Commonwealth Appropriation’ has been established. In establishing this new appropriation purpose it was also necessary to take into consideration the sometimes significant and unanticipated increases in Commonwealth funding that can occur during the year.


Examples of this are the payments resulting from the Northern Territory Emergency Response and the more recent Nation Building and Jobs Plan Fiscal Stimulus Package. These amounts are outside the Territory’s control. The different nature and magnitude of the new appropriation necessitates an alternative approach to varying this type of appropriation.


Commonwealth appropriation will need to be varied in line with Commonwealth revenue received for Special Purpose Payments and National Partnerships. A new provision has been established in the form of a standing appropriation to allow changes in Commonwealth funding throughout the year. Under this standing appropriation the treasurer will have the authority to increase the Commonwealth appropriation to match a variation to an existing or new Commonwealth agreement.


It is appropriate for the Treasurer to authorise such increases in appropriation for Commonwealth funded activities, as once an agreement with a Commonwealth has been reached for new or increased funding, there will be no choice but to authorise an increase in Commonwealth appropriation. This new provision is consistent with that of other jurisdictions. However, in order to provide further accountability, transparency and consistency with other variations to appropriation, the new section will also require the Treasurer to table a statement of the increase within six sitting days of the Assembly.


As you know, under the current arrangements, appropriation can be increased during a financial year well up to a maximum of 5% of total appropriations. This provision will now apply to total appropriation excluding Commonwealth appropriation.


It is a new funding arrangement commenced on 1 January 2009. The proposed amendments will be retrospectively applied. This also necessitates the introduction of the Appropriation Additional for 2008-09 Bill scheduled to be tabled later in these sittings. Accordingly, this amended bill is required to be enacted before the commencement of the Appropriation Additional for 2008-09 Bill, the Appropriation 2009-10 Bill and prior to 30 June 2009.


The requirement to amend the
Financial Management Act to accommodate the arrangements has provided an opportunity for other contemporary changes and administrative amendments to be made. These include additional definitions, the repealing of redundant sections and the alignment of reporting requirements with the Fiscal Integrity and Transparency Act.

Madam Speaker, I commend the bill to honourable members, and table the explanatory statement to accompany the bill.


Debate adjourned.


 


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