Details of the Financial Framework (Supplementary Powers) Amendment
(Treasury Measures No. 1) Regulations 2021

 

Section 1 - Name

 

This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Treasury Measures No. 1) Regulations 2021.

 

Section 2 - Commencement

 

This section provides that the Regulations commence on the day after the instrument is registered on the Federal Register of Legislation.

 

Section 3 - Authority

 

This section provides that the Regulations are made under the Financial Framework (Supplementary Powers) Act 1997.

 

Section 4 - Schedules

 

This section provides that the Financial Framework (Supplementary Powers) Regulations 1997 are amended as set out in the Schedule to the Regulations.

 

Schedule 1 - Amendments

 

Financial Framework (Supplementary Powers) Regulations 1997

 

Item 1 - In the appropriate position in Part 4 of Schedule 1AB (table)

 

This item adds a new table item to Part 4 of Schedule 1AB to establish legislative authority for government spending on an activity administered by the Department of the Treasury (the department).

 

New table item 480 establishes (and renews) legislative authority for government spending on the South Asia Regional Training and Technical Assistance Centre (SARTTAC), which will assist South Asian countries to design and implement policies that promote economic growth and reduce poverty.

 

SARTTAC is a collaboration between the International Monetary Fund (IMF), member countries (Bangladesh, Bhutan, India, the Maldives, Nepal and Sri Lanka) and development partners (Australia, the European Union, the Republic of Korea and the United Kingdom).

 

The goal for SARTTAC is to assist member countries in the South Asian region to build strong institutions and strengthen their capacity to design and implement policies that promote macroeconomic stability, sustainable growth and poverty reduction in line with the 2030 Agenda for Sustainable Development (available at sdgs.un.org/2030agenda). The Agenda is a non-binding roadmap for global development, which includes 17 sustainable development (social, economic and environmental) goals.

 

SARTTAC is the focal point for the delivery of IMF capacity development services to South Asia. Through a grant contribution, Australia has been able to aid the delivery of IMF capacity development and leverage its influence across South Asia to support improved economic policy and processes, as well as build close relationships with policy makers in the region.

 

SARTTAC is part of a broader Regional Engagement Facility (REF) program, which was announced in the 2013-14 Budget to enhance Australia's engagement in the Asian region. The REF was approved following the release of the Australia in the Asian Century White Paper on 29 October 2012, setting out a number of targets to achieve by 2025 to ensure Australia can compete effectively within Asia.

 

The REF was provided funding to help:

 

" ... strengthen Treasury portfolio engagement in the Asian region. This will be achieved through enhanced cooperation activities with the Chinese National Development and Reform Commission and agencies of other regional partners, including India, Indonesia, Japan, the Republic of Korea and Vietnam.

 

Activities will include joint research initiatives, the exchange of Treasury officials with
regional counterpart agencies and capacity building activities."

 

Funding from the REF was committed to SARTTAC for a five-year period from 2015-16. SARTTAC is a capacity building activity with India, as an important regional partner, and an avenue for strengthening the department's engagement with economies in the South Asian region, which are both key criteria of the REF. SARTTAC engages in providing technical assistance to countries and training activities, including courses on fiscal analysis and public sector debt statistics. Since inauguration in 2017, SARTTAC has rapidly increased the number of technical macroeconomic and financial courses it has offered and the number of participants it has trained. Through its contribution, Australia has been able to leverage its influence across South Asia to support improved economic policy and processes, as well as build close relationships with policy makers in the region.

 

The rationale for Australia's contribution was to enhance Australia's reputation with the IMF and the Indian Government. The funding commitment also offered the opportunity for engagement of Australian officials with their counterparts from South Asian countries and other donor governments through participation in SARTTAC management and attendance at SARTTAC training and events. Australia is represented on SARTTAC's steering committee. The steering committee provides strategic guidance and contributes to the setting of policies and priorities, and endorses an indicative annual work plan. Members of the steering committee include representatives from each of the member countries, development partners, the IMF and observer representatives from Japan and the United States of America.

 

Australia's early funding contributions in 2015-16 assisted with SARTTAC's establishment costs, ahead of its launch in February 2017. As one of its key donors, Australia is viewed as an important contributor to SARTTAC's success. Australia's contribution is an articulation of the value Australia places on the bilateral relationship with India, as well as Australia's commitment to multilateral institutions' capacity building efforts in the region.

 

Australia contributes around 10 per cent of the total partner funds. Other development partner contributors are:

*         the European Commission, contributing around 52 per cent;

*         the Republic of Korea, contributing around 25 per cent; and

*         the United Kingdom, contributing around 13 per cent.

 

The initial funding contribution to SARTTAC was made as a targeted, non-competitive grant to the IMF, with annual payments over a five-year period from 2015-16. The grant was entered into prior to the establishment of the Commonwealth Grants Rules and Guidelines 2017 (CGRGs). The commitment of funds at the time was made in accordance with the Public Governance, Performance and Accountability Act 2013 (PGPA Act), the Public Governance, Performance and Accountability Rule 2014, the Financial Framework (Supplementary Powers) Act 1997 and the department's accountable authority instructions. The department and the IMF signed a Letter of Understanding relating to Australia's funding contribution in April 2016, which inter alia sets out the terms and conditions for the administration of SARTTAC funds.

 

Future funding contribution will similarly be a multi-year targeted, non-competitive grant, with annual payments to the IMF subject to the CGRGs. The department will be responsible for the ongoing management of the grant and a delegate of the Secretary will provide the required financial approval as per the PGPA Act. The delegate will ensure that value with relevant money is achieved as part of the decision making process, and that appropriate contractual terms are negotiated with the IMF. The department will be responsible for the ongoing management of the arrangement. Grant opportunity guidelines will be developed and details of the grant will be published on GrantConnect at www.grants.gov.au.

 

Independent merits review is not considered suitable for decisions made in connection with payments to the IMF for SARTTAC. The Government provides this funding as part of its broader policy of deepening Australia's engagement in the South Asian region and is not a decision about funding the IMF in particular.

 

The funding decision, once made, will be final and not subject to merits review. This is because any such decision involves an allocation of a finite resource, and overturning the decision in order to allocate funding to another party would affect the allocation that has already been made to the IMF for SARTTAC. The Administrative Review Council has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.11 to 4.19 of the guide, What decisions should be subject to merit review?).

 

While the processes undertaken will be transparent, although not public, and comprehensively documented, the characteristics of this grant do not warrant an independent review, outside the normal processes of the Australian National Audit Office.

 

SARTTAC was originally proposed to the IMF by the Indian Government. In October 2015, the Director of the IMF's Asia-Pacific Department made a request on behalf of the IMF for a funding contribution from Australia to support its proposed new centre to be based in New Delhi, India. This followed on from informal approaches via the department's India post. The department advised the IMF of its in-principle agreement to provide funding for SARTTAC in February 2016. The department undertakes ongoing consultation with representatives from the Indian Government, SARTTAC and the IMF to ensure the program continues to effectively deliver on the Government's objective.

 

Funding for this item comes from Program 1.1: Department of the Treasury, which is part of Outcome 1. Details are set out in the Portfolio Additional Estimates Statements 2020-21, Treasury Portfolio at page 21.

 

Noting that this is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the external affairs power (section 51(xxix)) of the Constitution.

 

External affairs power

 

Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to 'external affairs'. The external affairs power supports legislation with respect to matters or things outside the geographical limits of Australia and with respect to matters concerning Australia's relations with other nations.

 

The program will involve the Commonwealth making payments to the IMF to fund an international program with the aim of assisting certain South Asian nations to develop macroeconomic policies for sustainable growth and poverty reduction.

 

Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Financial Framework (Supplementary Powers) Amendment (Treasury Measures No. 1) Regulations 2021

 

This disallowable legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the legislative instrument

 

Section 32B of the Financial Framework (Supplementary Powers) Act 1997 (the FF(SP) Act) authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the FF(SP) Regulations) and to make, vary and administer arrangements and grants for the purposes of programs specified in the Regulations. Schedule 1AA and Schedule 1AB to the FF(SP) Regulations specify the arrangements, grants and programs. The powers in the FF(SP) Act to make, vary or administer arrangements or grants may be exercised on behalf of the Commonwealth by Ministers and the accountable authorities of noncorporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013.

 

The Financial Framework (Supplementary Powers) Amendment (Treasury Measures No. 1) Regulations 2021 amend Schedule 1AB to the FF(SP) Regulations to establish (and renew) legislative authority for government spending on the South Asia Regional Training and Technical Assistance Centre (SARTTAC), which will assist South Asian countries to design and implement policies that promote economic growth and reduce poverty.

 

SARTTAC is a collaboration between the International Monetary Fund, member countries (Bangladesh, Bhutan, India, the Maldives, Nepal and Sri Lanka) and development partners (Australia, the European Union, the Republic of Korea and the United Kingdom).

 

The goal for SARTTAC is to assist member countries in the South Asian region to build strong institutions and strengthen their capacity to design and implement policies that promote macroeconomic stability, sustainable growth and poverty reduction in line with the 2030 Agenda for Sustainable Development. The Agenda is a non-binding roadmap for global development, which includes 17 sustainable development (social, economic and environmental) goals.

 

The Department of the Treasury has responsibility for this initiative.

 

Human rights implications

 

This disallowable legislative instrument does not engage any of the applicable rights or freedoms.

Conclusion

 

This disallowable legislative instrument is compatible with human rights as it does not raise any human rights issues.

 

 

 

 

 

Senator the Hon Simon Birmingham

Minister for Finance