This Financial Framework Legislation Amendment Bill (No. 1) 2007 primarily amends Division 3 of Part 4 of the Financial Management and Accountability Act 1997 (FMA Act). That Division consists of five sections, each relating to an appropriation authority. The Bill also contains a small number of consequential amendments to the Auditor-General Act 1997 and the Legislative Instruments Act 2003, and clarifies another matter in the FMA Act in relation to delegations.

Significantly, the amendments will considerably strengthen parliamentary oversight of the capacity for the FMA Act to increase agencies’ appropriations. Current arrangements under section 31, for example, require reference to three separate sources of information in order to identify both the amount of an increase, as well as the original source of the appropriation authority: those three sources are the agency’s “section 31 agreement”, of which there are 80-plus, as well as the text of section 31 of the FMA Act and the annual Appropriation Act in question. In addition to also being exempt from parliamentary scrutiny, these arrangements can vary widely from agency to agency. The revised arrangements, in the form of a regulation which could, for example, ultimately apply uniformly to all agencies, with any change subject to parliamentary disallowance. The revised arrangements will also be restricted to departmental items.

In addition to this increased oversight by Parliament, officials themselves will have better clarity and control over the appropriations administered within their respective agencies. The new section 32A will eliminate the current scope for appropriations to be increased automatically by operation of law, without officials necessarily even being aware that the increase has occurred. The revised arrangements will ensure that no increase to an agency’s appropriation will take place until a record has been made in the agency’s accounts and records. This considerably tightens agencies’ oversight of appropriations.

This is the third Financial Framework Legislation Amendment Bill, with two previous Financial Framework Legislation Amendment Acts having been passed in 2005 and 2006. Each has evidenced ongoing monitoring and review, showing that incremental improvements to the financial framework continue on an ongoing basis. While this area is relatively technical, it is an important part of financial management accountability that the Government takes seriously.

Finally, the Senate Standing Committee for the Scrutiny of Bills sought advice in regard to the amendments to section 32 of FMA Act, as detailed in the Scrutiny of Bills Alert Digest No. 6 of 2007. The Committee requested additional explanation about the proposed section 32 amendments. The Committee’s requests have been addressed in replacement explanatory memorandum accompanying this Bill.

I commend the Bill.