House of Representatives

Second Reading Speech

Mr SLIPPER (Fisher - Parliamentary Secretary to the Minister for Finance and Administration)

I move:

That this bill be now read a second time.

The purpose of this bill is to amend acts that are a consequence of the commencement of the Financial Management Legislation Act 1999 (FMLA Act 1999) on 1 July 1999 and to update, clarify and align other financial management and reporting provisions. It proposes amendments to 112 acts and the repeal of 28 acts.

An exposure draft of the bill was subject to an inquiry by the Joint Committee of Public Accounts and Audit (JCPAA), which tabled its report (number 395), Inquiry into the draft Financial Framework Legislation Amendment Bill, on 20 August 2003. The government tabled its response to the report on 26 June 2004. The report's recommendations led to changes to the bill that were agreed by the government in its response. The JCPAA inquiry was also of benefit because it provided an opportunity for stakeholders to discuss a range of important issues and to gain an appreciation of the similarity of many of the amendments proposed in the bill.

A number of other changes have been made to the bill since the exposure draft was released for the purposes of the JCPAA inquiry. These changes reflect recent developments. The Minister for Finance and Administration has notified the chairman of the JCPAA of these changes and the reasons for them.

In the second reading of the FMLA Act 1999, I foreshadowed that a consequential amendments bill would be introduced that will ensure that terminology in other acts is consistent with the Financial Management and Accountability Act 1997 (FMA Act) as amended by the FMLA Act 1999. These consequential amendments account for the bulk of the amendments proposed in schedule 1 of the bill.

The FMLA Act 1999 abolished the following three funds created by the FMA Act: the loan fund, the Reserved Money Fund and the commercial activities fund. These funds were located outside the Consolidated Revenue Fund as it was then envisaged. The balances of these funds were merged in the Consolidated Revenue Fund and components of the Reserved Money Fund and commercial activities fund were replaced with special accounts. A special account records amounts in the Consolidated Revenue Fund appropriated for expenditure on the purposes of the special account.

The FMLA Act 1999 also reflected the adoption of the concept of a self-executing Consolidated Revenue Fund. That is, that money raised or received by the executive government automatically forms part of the Consolidated Revenue Fund without the need to credit a ledger account or a bank account designated as the Consolidated Revenue Fund.

The FMLA Act 1999 provided that references in other acts and legislative instruments to the funds being abolished, and related terminology, were deemed to be read as changed to the new terminology introduced by that act. The amendments contained in schedule 1 of the bill are almost exclusively textual changes to acts to align them with the changed terminology introduced by the FMLA Act 1999.

Most of the amendments proposed in schedule 2 of the bill provide for the transfer of powers, from the Treasurer to the finance minister, to approve investments, money raising and guarantees of certain bodies that are legally and financially separate from the Commonwealth. Most of these bodies are authorities subject to the Commonwealth Authorities and Companies Act 1997 (CAC Act). The amendments also introduce clear delegation powers for the finance minister.

The transfer of these approval powers will co-locate in Finance, as one central portfolio, powers relating to the financial oversight of bodies that are mainly funded from the budget. This will provide for more efficient and effective decision-making in relation to the resources available to these entities.

Schedule 3 of the bill proposes the repeal of acts. Most of these acts would otherwise have required amendment of text to align with the FMLA Act 1999. However, because the acts are redundant, they are included for repeal instead.

Schedule 1 of the bill proposes minor amendments to the Australian Securities and Investments Commission Act 2001 and the Corporations Act 2001, again reflecting the concept that the Consolidated Revenue Fund is self-executing. The Ministerial Council for Corporations has been consulted about these amendments and the required number of votes were received pursuant to the Corporations Agreement.

The bill also proposes amendments to the FMA Act and the CAC Act that are not covered by the types of amendments that I described earlier.

The amendments to the FMA Act are mainly of the following three types. The first concerns clarifying and expanding the information required, or allowed, in a determination of the finance minister that establishes a special account. This amendment reflects the government's agreement to recommendation 1 of the JCPAA's report 395.

The second type concerns specifying the membership, in certain circumstances, of an advisory committee that considers proposals for large act of grace payments or waivers, to replace a reference to the chief executive of the former Department of Administrative Services with a chief executive nominated by the finance minister.

The third type concerns clarifying delegation powers of chief executives of agencies, and directions relating to the exercise of a power or function delegated.

The amendments to the CAC Act align the offence provisions applying to the conduct of officers with the Criminal Code Act 1995.

This proposed law will update, clarify and align a wide range of financial management provisions applying to Commonwealth entities and thereby enhance the financial management framework of the Australian government generally. I present the explanatory memorandum to the bill and commend the bill to the House.