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FACT SHEET
Financial Management Bill 2015
The existing financial management framework reflects the financial administration and
budgeting practices of the late 1980s. While legislation has been periodically amended to
accommodate changes, it has become increasingly apparent that the framework no longer
represents best practice. As a consequence, a full review of Tasmania’s Financial
Management framework, including the structure of the legislation has been undertaken.
The Financial Management Bill will replace the Public Account Act 1986 and remaining
financial management provisions in the Financial Management and Audit Act 1990.
The Financial Management Bill broadens the scope of Tasmania’s financial management
framework. Currently, only government departments and parliamentary and integrity
entities operate within the financial management framework, with other General
Government Sector entities operating in accordance with their individual enabling
legislation. The Financial Management Bill includes all General Government Sector entities
under a single, cohesive framework.
The Public Account currently comprises two separate funds, the Consolidated Fund and
the Special Deposits and Trust Fund, with each fund operating under a different set of
rules. Under the Financial Management Bill, there will be a single fund structure with a single
set of rules providing the Government with significantly enhanced control over the entire
Public Account.
The Public Account will comprise the receipts of the General Government Sector,
expenditure of the General Government Sector and any Specific Purpose Accounts
established under the Act.
There are instances where money is held by the Government in trust and may only be
used in accordance with the terms of the trust. The Financial Management Bill provides that
money held by the Government in trust will be clearly accounted for in Agency Trust
Accounts, as determined by the Treasurer, and will not form part of the Public Account.
This clearly recognises the trustee nature of those monies.
Current arrangements for the Treasurer’s Reserve under the Public Account Act are
complex and provide an uncapped source of funding that could discourage effective fiscal
responsibility. The Financial Management Bill improves the transparency of the
Treasurer’s Reserve by providing a more simple calculation of the Reserve amount and
making the size of the effective buffer more certain
The Bill specifies the composition of the Treasurer’s Reserve as:
- an amount that is contingently appropriated in the annual Appropriation Act; and
- receipts, excluding additional Commonwealth money, that are additional to the
total estimated receipts in the Appropriation Act.
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Additional Commonwealth money received by the State is dealt with separately in the Bill
and will now be appropriated directly.
Other Australian jurisdictions use a variety of terms to denote the person or body
responsible for the financial management of a Government entity. As the scope of the new
Financial Management Bill is broad and includes other entities, the more encompassing term
of “accountable authority” is used within the Bill. This term is consistent with the Audit Act.
Relevant accountable authorities are scheduled within the Bill and the Governor has the
power, by order, to amend this Schedule to allow for administrative restructures.
The reporting arrangements in the Bill replicate amendments made to the Financial
Management and Audit Act by establishing a reporting model that incorporates a
September Quarterly Report, a Revised Estimates Report, a December Quarterly Report, a
March Quarterly Report and the Treasurer’s Annual Financial Report.
The Financial Management Bill establishes the Treasurer’s powers and obligations in relation
to borrowing, guarantees and indemnities on behalf of the Crown.
The Bill also suspends the financial management provisions contained in the enabling Act of
an Agency, during the period that the Agency is subject to the Financial Management Act.
One of the primary functions of an accountable authority is to provide various reports to
stakeholders on the financial and non-financial performance of the Agency for which they
are responsible. The Financial Management Bill prescribes the financial reports to be
produced and requires them to contain such information as may be required by the
Treasurer’s Instructions.
Under the Financial Management Bill, if an Agency is abolished, the Treasurer will appoint a
reporting officer to prepare and submit financial reports in accordance with the Bill.
The Bill provides that the reporting officer is entitled to reasonable assistance and facilities
to undertake the preparation of a final financial report.
Due to the discretionary nature of ex gratia payments, the Bill establishes provisions for the
authorisation and making of such payments. This includes a requirement for the appropriate
authorisation of ex gratia payments and provisions for the recovery of payments in the
event that any conditions of payment are breached. These provisions are in line with
legislation in a number of other jurisdictions.
Where authority for an appropriation lapses at the end of a year, the current legislation
allows the Treasurer to extend approval to spend into the first three months (or up to
twelve months) of the following financial year.
The Financial Management Bill does not retain the existing carry forward arrangements.
Where an appropriation amount remains unspent, the Treasurer may determine that an
amount that does not exceed five per cent of the Agency’s appropriation may be issued
and applied from the Public Account in the following financial year. The Treasurer’s
determination will specify the purpose for which the amount is to be issued and applied.
Subject to the Treasurer’s approval, the unspent amount will be returned to the
Public Account in the current year and will be automatically appropriated in the following
year.
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The Bill provides authority for the delegation, by an accountable authority, of financial
management responsibilities. Any delegation power contained within an enabling Act of a
Statutory Authority will remain unchanged.
Currently, the Treasurer may issue Treasurer’s Instructions with respect to the principles,
practices and procedures to be observed in the financial management of all agencies. All
Australian jurisdictions utilise a similar process for providing instruction or guidance to assist
agencies in respect of financial management principles, processes and practices.
Where required, Treasurer’s Instructions will be issued under the Financial Management Bill
to expand on the principles contained in the legislation by providing additional instruction
and guidance.
Inclusion of specific accountable authority responsibilities and process requirements in the
Treasurer’s Instructions will promote greater speed and flexibility, in responding to changes
in the financial management environment, than if those responsibilities and process
requirements were included in the Bill.
The Financial Management Bill addresses a number of key areas in relation to financial
management in Tasmania, it modernises the Public Account structure, governance
arrangements as well as Budget management and financial reporting.
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