Revised Explanatory Memorandum(Circulated by authority of the Minister for Finance, Senator the Hon Mathias Cormann)
Notes on Schedule 1 - Public Governance, Performance and Accountability Act 2013
11. The proposed amendments to the PGPA Act would, if enacted, improve the operation of the PGPA Act.
Part 1 - Amendments
12. Item 1 would insert definitions for the terms "GST", "GST Act" and "GST qualifying amount" into section 8 of the PGPA Act. The defined terms replicate those previously provided for in section 30A of the FMA Act.
13. Item 2 would amend the definition of "reporting period" in section 8 of the PGPA Act to allow for a reporting period to be any other period prescribed by an Act or the rules for an entity, company or subsidiary. The item would insert the words "an Act or" immediately after the words "prescribed by" in paragraph 8(b) for the definition of "reporting period" to reflect that enabling legislation prescribes reporting periods in some instances.
Corporate plan titles
14. Item 3 would amend paragraph 35(1)(a) of the PGPA Act to insert the words "(however described)" after the words "corporate plan". This would have the effect that a corporate plan, prepared under section 35, can be given a different title. Item 8 would amend paragraph 95(1)(a) in the same way to ensure consistency in corporate plan requirements for Commonwealth entities and Commonwealth companies.
15. The purpose of the corporate plan requirement is to promote the development and use of medium term planning activities and documents. A number of entities are already engaged in such activities as a result of requirements in their enabling legislation, and attach a variety of names to such documents e.g. strategic plans or operational plans. As these names have an importance attached to them by their entities and key stakeholders, including other jurisdictions and industry bodies, it is not proposed to prevent them using these alternative titles as long as a plan is prepared that meets the corporate planning objectives of the PGPA Act.
Arrangements for GST
16. Non-corporate Commonwealth entities such as departments are legally part of the Commonwealth and, as a result of constitutional requirements, cannot make payments without access to the spending authority of a valid appropriation. Annual appropriations approved by the parliament do not account for amounts that entities need to meet their GST obligations, as amounts appropriated in annual Appropriations Acts are finite amounts and at the time of preparing these Acts, the finite amount of GST payments to be made in the year ahead is not known.
17. Under the FMA Act, non-corporate Commonwealth entities were able to increase certain limited appropriations to cover the GST component of the price of acquiring goods and services, and could receive and forward amounts to the Australian Taxation Office (ATO). These arrangements were continued for 2014-15 while further consultation occurred on how such arrangements should be administered in future.
18. The proposed amendments consolidate these arrangements in a single provision, unlike the previous FMA Act arrangements, and include a rule making power in relation to the GST arrangements of non-corporate Commonwealth entities.
19. Item 4 would amend section 73 of the PGPA Act to insert "or make payments relating to GST" after "certain amounts" to clarify that this part of the PGPA Act references GST arrangements.
20. Item 5 would insert a new section 74A after section 74 to provide for appropriations to take account of recoverable GST.
Streamlining administration of transfers of functions between non-corporate Commonwealth entities
21. The proposed amendments would make minor changes to subsections 75(2) and (3), to ensure that it is clear that the Finance Minister is modifying, rather than making actual textual amendments to, the Appropriation Acts in Determinations made under that section of the Act. This is intended to simplify the process of preparing and updating determination instruments and allow for new arrangements that involve the instruments maintaining a running tally of transfers of appropriation to and from an entity, improving clarity and understanding of available appropriations.
22. Item 6 would repeal subsection 75(2), not including the heading, and substitute a new subsection to provide that "the Finance Minister may determine that the operation of one or more Schedules to one or more Appropriation Acts is modified in a specified way. The modification must be related to the transfer of function".
23. Item 7 would amend subsection 75(3) to omit the words "the Schedule concerned were amended" and substitute the words "the operation of the Schedule concerned were modified".
Part 2 - Application of amendments
24. Item 9 provides that the amendments proposed by items 1, 4 and 5 contained in this Schedule are to apply in relation to payments that are made on or after 1 July 2015. Amounts relating to appropriations for GST in the 2014-15 financial year are covered by items 40 and 41 in the transitional provisions of Schedule 2 to the PGPA (C & T) Act.
25. The item also provides that the amendments proposed by items 6 and 7 of this Schedule are to apply to determinations made by the Finance Minister after the commencement of the amendments in relation to transfers of functions occurring before or after that commencement time.