House of Representatives

Explanatory Memorandum

(Circulated with the authority of the Minister for Finance and Deregulation, Senator the Hon Penny Wong)

Financial Framework Legislation Amendment Bil (No. 2) 2012

I. GENERAL OUTLINE

The Financial Framework Legislation Amendment Bill (No. 2) 2012 (FFLA Bill (No. 2) 2012) is the tenth Financial Framework Legislation Amendment Bill (FFLA Bill) since 2004, and forms part of the ongoing program to address financial framework issues as they arise, and assist in ensuring that specific provisions in existing legislation remain clear and up-to-date. These changes have been developed in collaboration with the relevant Ministers and their Departments.

A total of 8 out of 10 FFLA Bills have become law, with the first and the sixth FFLA Bills lapsing upon the prorogation of the Australian Parliament for the 2004 and 2010 federal elections. The first FFLA Bill focussed primarily on amending legislation to reflect the creation of Special Accounts in the Financial Management Legislation Amendment Act 1999 . Later FFLA Bills have covered a range of matters including financial management provisions, governance structures and legislative anomalies. The FFLA Bill (No. 2) 2012 continues this active program to improve the Commonwealth's financial framework on an ongoing basis, as issues emerge and solutions are identified.

Main features of the FFLA Bill (No. 2) 2012

The FFLA Bill (No. 2) 2012 would, if enacted, amend 21 Acts across 6 portfolios to regularise Commonwealth payments supported by special appropriations (including Special Accounts) consistent with the legislative requirements and section 83 of the Constitution.

Specifically, the FFLA Bill (No. 2) 2012 would, if enacted:

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Amend 9 Acts: the Defence Force Retirement and Death Benefits Act 1973 ; the Governor-General Act 1974 ; the Local Government (Financial Assistance) Act 1995 ; the Military Superannuation and Benefits Act 1991 ; the Parliamentary Contributory Superannuation Act 1948 ; the Same-Sex Relationships (Equal Treatment in Commonwealth Laws-Superannuation) Act 2008 ; the Superannuation Act 1976 ; the Superannuation Act 1990 ; and the Taxation Administration Act 1953 to provide a mechanism, called a 'recoverable payment', to address administrative issues common to 4 portfolios. The provisions would provide authority for the inadvertent overpayments of some benefits, and for their recovery in line with the duty to pursue recovery of a debt under section 47 of the Financial Management and Accountability Act 1997 (FMA Act).

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Amend the Taxation Administration Act 1953 within the Treasury portfolio, to enable the Commissioner of Taxation to decide to make a 'recoverable advance' where the Commissioner, or the Commissioner's delegate, decides to make a payment which would not otherwise be payable because the likely cost of not making payment would exceed the total of the advance. If a recoverable advance is made, the amount of the overpayment remains a debt due to the Commonwealth.

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Amend 7 Acts: the Defence Force Retirement and Death Benefits Act 1973 ; the Governor-General Act 1974 ; the Military Superannuation and Benefits Act 1991 ; the Parliamentary Contributory Superannuation Act 1948 ; the Same-Sex Relationships (Equal Treatment in Commonwealth Laws-Superannuation) Act 2008 ; the Superannuation Act 1976 ; and the Superannuation Act 1990 to authorise the Commonwealth to make 'recoverable death payments'. These amendments allow for payments to be made up until ComSuper or the relevant Secretary (where applicable) is notified of a benefit recipient's death. Where payments have been made in the interim period, between the recipient's death and the notification, those amounts would be recoverable from the deceased's estate.

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Amend 8 Acts: the Defence Force Retirement and Death Benefits Act 1973 ; the Governor-General Act 1974 ; the Military Superannuation and Benefits Act 1991 ; the Parliamentary Contributory Superannuation Act 1948 ; the Same-Sex Relationships (Equal Treatment in Commonwealth Laws-Superannuation) Act 2008 ; the Superannuation Act 1976 ; the Superannuation Act 1990 ; and the Taxation Administration Act 1953 to provide that where the recoverable payment, recoverable death payment or recoverable advance provisions are used, the relevant Secretary or Chief Executive is to ensure that a report, detailing the total number of instances of use and the total value of those instances, is published, during the applicable publication period for a reporting period, as the Secretary or Chief Executive considers appropriate.

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AmCend the Parliamentary Contributory Superannuation Act 1948 to align the deduction of amounts of benefit paid to a person, as an overpayment or in error, with the recovery provisions provided in the recoverable payment and recoverable death payment provisions.

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Amend the Superannuation Act 1976 to clarify that the Commonwealth Superannuation Corporation's (CSC) ability to recover amounts of benefit paid applies only to amounts paid by CSC. The Superannuation Act 1976 provides for certain benefits to be paid directly from the CSS Fund to a person rather than via the Consolidated Revenue Fund (CRF). This amendment ensures that amounts paid from CRF are not recoverable by CSC. However, the amounts will still be recoverable under section 47 of the FMA Act.

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Amend the ComSuper Act 2011 to enable the CEO to delegate, in writing, the CEO's function and/or all or any of the CEO's powers under that Act or any other law of the Commonwealth to an SES employee or acting SES employee in ComSuper.

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Amend 8 Acts: the Australian Meat and Live-stock Industry Act 1997 ; the Dairy Produce Act 1986 ; the Egg Industry Service Provision Act 2002 ; the Forestry Marketing and Research and Development Services Act 2000 ; the Horticulture Marketing and Research and Development Services Act 2000 ; the Pig Industry Act 2001 ; the Primary Industries and Energy Research and Development Act 1989 ; and the Wool Services Privatisation Act 2000 within the Agriculture portfolio, to better align current practices and the relevant legislation.

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Amend the Australian Animal Health Council (Live-stock Industries) Funding Act 1996 to align the process for recovering the administrative costs of the agency, in administering payments to the Council, with the processes prescribed in other comparable legislation also administered by the department.

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Amend the National Residue Survey Administration Act 1992 to remove the requirement for payments to be made "in accordance with an expenditure program approved by the Minister", as in practice the program will often be approved by the Minister after payments are required to be made.

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Amend the Australian Maritime Safety Authority Act 1990 to reflect better alignment between current practice and the legislation.

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Validate certain benefits under the Defence Force Retirement and Death Benefits Act 1973 to regularise the treatment of certain benefit recipients.

Financial Impact Statement

The proposed amendments have no financial impact. The amendments are aimed at addressing administrative issues in making payments supported by special appropriations (including a Special Account established in an Act).

Statement of Compatibility with Human Rights

The proposed amendments do not engage any of the applicable rights or freedoms outlined in the Human Rights (Parliamentary Scrutiny) Act 2011 , such as encompassed in the International Covenant on Civil and Political Rights .

The proposed amendments do not limit any human rights, nor propose any offences or penalties.

This Bill is therefore compatible with the human rights and freedoms recognised or declared in the international instruments listed in subsection 3(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 .

II. NOTES ON CLAUSES

1. The structure of the FFLA Bill (No. 2) 2012 comprises the long title, one clause that provides the short title and then one clause that refers to the 2 Schedules that contain the substantive amendments to other Acts. These notes describe the content and effect of the long title and the 3 clauses.

ong title

2. The long title of the FFLA Bill (No. 2) 2012 provides that it is a Bill for an Act to amend the law relating to the Commonwealth's financial framework and governance arrangements, and for other purposes.

3. The Australian Constitution provides direction on the nature and expenditure of the Commonwealth. The Commonwealth's financial framework and governance arrangements are made up of various Acts of Parliament, which mostly concern the control of public resources.

4. The Financial Management and Accountability Act 1997 (FMA Act) and the Commonwealth Authorities and Companies Act 1997 (CAC Act) are the principal Acts that set out the Commonwealth's financial framework. Additional Acts provide, in part, financial and governance arrangements for specific agencies. Such additional Acts include the Acts that would be amended by Schedule 1 of the FFLA Bill (No. 2) 2012.

5. Further information about the structure of the Australian Government and related governance policies is contained in the List of Australian Government Bodies and Governance Relationships and the Governance Arrangements for Australian Government Bodies , through the web site listing publications by the Department of Finance and Deregulation (www.finance.gov.au). A single page listing FMA Act agencies (by portfolio) and a page listing CAC Act bodies (by portfolio) is published under the name "Flipchart" in the publications of the Department of Finance and Deregulation (www.finance.gov.au).

Clause: Short title

6. This clause provides that, if the FFLA Bill (No. 2) 2012 is enacted, it may then be cited as the Financial Framework Legislation Amendment Act (No. 2) 2012 .

C clause 2: Commencement

7. This clause provides that if the FFLA Bill (No. 2) 2012 is passed:

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Clauses 1 to 3 would commence on the day that the FFLA Bill (No. 2) 2012 receives Royal Assent;

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Items in Schedule 1 , would commence the day after the FFLA Bill (No. 2) 2012 receives Royal Assent; and

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Items in Schedule 2 , would commence the day after the FFLA Bill (No. 2) 2012 receives Royal Assent.

Clause 3: Schedules

8. This clause provides that each Act, as specified in one of the 2 Schedules to the FFLA Bill (No. 2) 2012, is to be amended or repealed as set out in the applicable items in that Schedule of the FFLA Bill (No. 2) 2012.

9. Clause 3 also provides that any other item in a Schedule has effect according to its terms, which relates to provisions such as application provisions.

10. Briefly, the Schedules in the FFLA Bill (No. 2) 2012, in consecutive order, would amend or repeal the Acts listed below.

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Schedule 1 would amend the following 21 Acts:

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Australian Animal Health Council (Live-stock Industries) Funding Act 1996

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Australian Maritime Safety Authority Act 1990

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Australian Meat and Live-stock Industry Act 1997

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ComSuper Act 2011

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Dairy Produce Act 1986

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Defence Force Retirement and Death Benefits Act 1973

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Egg Industry Service Provision Act 2002

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Forestry Marketing and Research and Development Services Act 2007

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Governor-General Act 1974

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Horticulture Marketing and Research and Development Services Act 2000

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Local Government (Financial Assistance) Act 1995

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Military Superannuation and Benefits Act 1991

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National Residue Survey Administration Act 1992

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Parliamentary Contributory Superannuation Act 1948

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Pig Industry Act 2001

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Primary Industries and Energy Research and Development Act 1989

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Same-Sex Relationships (Equal Treatment in Commonwealth Laws-Superannuation) Act 2008

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Superannuation Act 1976

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Superannuation Act 1990

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Taxation Administration Act 1953

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Wool Services Privatisation Act 2000

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Schedule 2 would validate certain payments under the Defence Force Retirement and Death Benefits Act 1973 .