This Act sets the legal framework for how Victoria manages public money, prepares and publishes budgets and financial reports, and holds public bodies and officials accountable for financial management.
What the Act does, mechanically
Establishes the Consolidated Fund and the Trust Fund and rules for their use (Part 2, s.9; Part 4, s.19). Money payable to the State is credited to the Consolidated Fund unless an Act requires it to go to a Trust Account (s.9(2)).
Requires the Minister to maintain a Public Account and ledger and to control where public money is held (s.13–16, s.14).
Sets out how money may be appropriated, reallocated, advanced temporarily and repaid, including limits for temporary advances (Part 6, ss.28–39, ss.35–36).
Requires a suite of budget and reporting documents: financial policy statements, estimated financial statements, accompanying statements, budget updates, quarterly and mid‑year reports, an annual financial report and a pre‑election budget update in specified circumstances (Part 5, ss.23E–23N, 23K, 24–27B). Timetable and transmission rules are set out (s.27D, s.27E).
Establishes governance and accountability duties: an accountable officer for each department and public body (s.42), a designated chief finance officer (s.43), board responsibilities (s.43A, 43D) and specific obligations to keep accounts, asset registers and risk strategies (ss.44–44B). Officers must provide information and report likely budget breaches (ss.44A, 44AC, 44C).
Gives the Minister and Treasurer specific powers: the Minister can give binding directions to departments and public bodies and issue guidelines (s.8, s.8A); the Treasurer can grant indemnities, set guarantee charges and determine financial‑accommodation levies (Part 6A ss.40C–40H; Part 6B ss.40K–40L; Part 6C ss.40M–40O).
The Financial Management Act 1994 (Vic) is the foundational statute for managing Victoria's public finances. Its three purposes under section 1 are: improving financial administration of the public sector; making better provision for accountability; and providing for annual parliamentary reporting by departments and public sector bodies.
The Act creates the three main public accounts, establishes principles of sound financial management that bind the Government, sets out the accountability and reporting framework for departments and public bodies, governs budget management, and regulates government indemnities, guarantee charges, financial accommodation levies, and procurement through the Victorian Government Purchasing Board.
Main concepts
Consolidated Fund. The State's central operating account, into which tax revenue, Commonwealth grants, and other public money flows. Appropriations from the Consolidated Fund fund the operations of government. Section 9 establishes the Fund.
Public Account. The banking and investment vehicle for moneys standing to the credit of the Consolidated Fund and the Trust Fund. Section 14 establishes the Account. Money in the Public Account may be invested (section 18) and drawn upon to meet appropriations (section 38).
Trust Fund. A separate account for moneys held in trust, for specific statutory purposes, or not yet appropriated (sections 19-22). Departmental Working Accounts (section 23) sit within the Trust Fund.
Current sections
Direct links to the current provisions in Financial Management Act 1994.
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Establishes the Victorian Government Purchasing Board with powers to make supply policies, enter contracts, and oversee procurement compliance for declared entities (Part 7A, ss.54A–54M).
Provides emergency powers for fee and charge collectors to waive, defer, refund or reduce statutory fees and charges during an emergency period, subject to Treasurer guidelines and appropriation rules for refunds (Part 7C, ss.54Q–54V).
Grants the Governor in Council and Ministers various order‑making and declaration powers (for example to declare relevant Ministers, specified entities, declared bodies) and empowers the making of regulations for detailed financial governance (ss.5, 41A, 54AA, s.59).
Who is affected and who decides
Departments, public bodies and specified entities: must prepare and publish reports and financial statements, maintain records and registers, comply with supply policies, and operate within budget expectations (s.23D(1)(ba); ss.45–49; s.54L(4)).
Accountable officers and chief finance officers: statutory duties to maintain proper accounts, designate a chief finance officer, provide financial information and report material risks (ss.42–44AC).
Ministers, the Treasurer and Governor in Council: exercise major powers (directions, indemnities, guarantee charges, Orders declaring entities) and decide on appropriations, transfers and exemptions (s.8; Parts 6A–6C; ss.28–33; s.47).
Private persons and organisations that receive State guarantees, loans or contracts: subject to guarantee charges and levies (ss.40K, 40N); may be affected by Board procurement decisions which can enter contracts on behalf of the State (s.54C(2)(a)).
Officers who receive overpayments, or who cause loss through misconduct or gross negligence, may be liable to repay or be required to reimburse the State (ss.56–57).
Why it matters (stated purpose and how that interacts with costs and incentives)
The Act’s stated purposes are to improve financial administration, increase accountability and provide for annual reporting to Parliament (s.1). To achieve that, the Act requires frequent, standardised reporting, audits and disclosure (Part 5, ss.23H–24, 26). Those mechanisms increase information available to Parliament and the public but impose ongoing compliance costs on departments and public bodies (timelines and content requirements in ss.27D, 27E, 24(2), 26(1)–(4)).
The Act imposes financial discipline by requiring the Government to operate according to principles of sound financial management and by setting an expectation that departments and public bodies operate within budgets (ss.23C–23D(1)(ba)). This creates administrative incentives to control expenditure and report budget risks early (s.44C), but it also creates compliance and planning burdens (preparing estimated statements, sensitivity analyses and accompanying statements—ss.23J, 23K).
The Treasurer’s power to require guarantee charges and levies (ss.40K, 40N) shifts some of the fiscal cost of State guarantees or preferential borrowing onto recipients or public authorities. Mechanically, the Treasurer sets a rate up to the difference between the cost with and without the guarantee (40K(1)). This transfers a priced portion of risk back to users of the guarantee but requires collecting information from those persons (s.40L) and gives the Treasurer considerable discretion in rate setting and assessments.
The provisions authorising indemnities (Part 6A, ss.40C–40H) permit the State to underwrite liabilities for directors, statutory authorities, State companies, and lenders of exhibition goods. Those indemnities create contingent claims on the Consolidated Fund (s.40H(1)). The Act allows the Treasurer to charge for indemnities (s.40F) but also makes the Consolidated Fund available to meet indemnity payments (s.40H), so the public fisc bears residual risk unless fully charged back.
Centralising procurement policy and contracting through the Board (Part 7A, ss.54A–54C, 54L) creates a single policy and contracting actor that can standardise purchasing and run tenders or enter contracts on behalf of departments (s.54C(2)(a)–(c)). Mechanistically this reduces duplication and may create efficiencies; it also changes how suppliers access government business and concentrates decision‑making about conditions of supply and contract awards in the Board and those it authorises.
Emergency fee‑waiver powers (Part 7C, ss.54Q–54V) enable fee reductions during emergencies. The Act requires waivers to follow Treasurer guidelines (s.54S(2)(a)) and provides for refunds to be paid from the Consolidated Fund or relevant accounts (s.54T). The mechanism transfers the immediate financial relief to fee payers but shifts the fiscal cost to public accounts or the Consolidated Fund.
Trade‑offs, compliance burdens and implementation risk
Trade‑offs: The Act increases transparency and central oversight (reporting, audits, Board functions) at the cost of administrative work for departments and public bodies (documentation, asset registers, risk strategies—ss.44–44B; reporting timetables—s.27D). Guarantee charges and levies reduce implicit subsidy but require collection systems and compliance checks (ss.40K–40L, 40N).
Compliance burden: Recurrent requirements (quarterly, mid‑year, annual reports; estimated statements; accompanying statements; gender impact statements—ss.23H–23K, 23O–23Q, 24–26) and Minister/Treasurer information requests (ss.44A, 44AC, 51) create ongoing reporting obligations. Auditing obligations and timelines (s.24(3), 45(2)) further increase workload.
Bureaucratic discretion and risk: The Act delegates substantial discretion to the Minister and Treasurer (directions s.8; indemnities s.40C; guarantee rates s.40K; supply policies ss.54L, 54K). That discretion enables responsive governance but concentrates decision rights and creates execution risk if governance or processes are weak.
Effects on private enterprise, competition, ownership and contract freedom
Procurement centralisation: The Board can enter contracts on behalf of the State and set supply policies (ss.54C(2)(a), 54L). Mechanically, this can standardise contracts and procurement processes across departments and specified entities, affecting how private suppliers compete for government work and the terms offered.
Pricing of State support: Guarantee charges and levies (ss.40K, 40N) provide a mechanism to pass parts of the cost of State guarantees and borrowing back to recipients, affecting borrowing costs and potentially pricing some commercial decisions differently than when guarantees carried no explicit charge.
Emergency fee waivers: The Act permits fee reductions during emergencies (s.54S), which can reduce costs for affected private entities in the short term but shifts the cost to public accounts (s.54T).
Concentrated benefits, diffuse costs and accountability lines
Concentrated benefits: Specific parties (borrowers benefiting from a State guarantee, or suppliers winning centralised contracts) may receive concentrated benefits from provisions such as indemnities, guarantee arrangements, or Board contracts (Parts 6A, 6B, 7A).
Diffuse costs: The Consolidated Fund is the backstop for indemnities and refunds (ss.40H, 54T), which spreads financial exposure across taxpayers unless charged back through fees or levies (ss.40F, 40K, 40N).
Practical compliance and implementation points to watch (mechanisms, not judgments)
Timely preparation and audit of statements and reports is a recurring legal requirement with fixed due dates (s.27D table; ss.24(3), 45(2)).
Ministers and the Treasurer hold powers that can change obligations by direction or guideline (s.8; s.8A; s.54U) and can declare entities subject to particular Parts (ss.41A, 54AA), so departments and bodies need processes to track and respond to those instruments.
Departments and public bodies must maintain asset registers and risk management strategies in a form determined by the Minister (s.44B), and must notify Treasury if they are likely to exceed budget and provide a plan (s.44C).
Key sections cited: governance and duties (ss.42–44C), budget and reporting (Part 5, ss.23E–23N, 23K, 24–27D, 27E), Consolidated and Trust Funds (ss.9, 19), Minister and Treasurer powers (s.8, s.8A, Part 6A, Part 6B, Part 6C), procurement Board and supply policies (Part 7A, ss.54A–54L), emergency fee powers (Part 7C, ss.54Q–54V), regulations and delegated powers (s.59).
Accountable officer. Defined by section 3 and section 42. For departments and public bodies, the accountable officer is the person responsible for managing the entity's financial affairs, accountable to the relevant Minister and the Parliament. Section 43B sets out the financial management responsibilities of accountable officers.
Chief finance officer. Section 43 and section 43C. The senior financial manager within a department or public body, responsible for financial reporting accuracy and risk disclosure.
Principles of sound financial management. Section 23D sets out five principles binding on the Government: managing financial risks prudently (including debt, commercial risks from state-owned corporations, tax base changes, and asset/liability management); pursuing stable spending and taxing policies; maintaining the integrity of the Victorian tax system; ensuring policy decisions have regard to future generations; considering and promoting gender equality and inclusivity in spending and taxing policies (the latter added by No. 21 of 2024); and providing full, accurate, and timely disclosure of financial information.
Annual appropriation Act. The separate Act passed each year by Parliament appropriating money from the Consolidated Fund for the financial year. The FMA provides the framework within which the annual appropriation operates.
Who it affects
The Victorian Government. Part 5 financial responsibility provisions apply to the Government as a whole (sections 23C-23E). Section 23C establishes the Parliament's intention that the Government maintain a budgeting and reporting framework consistent with the principles of sound financial management.
Departments and public bodies. The accountability and reporting provisions in Part 7 apply to all departments (including administrative units of the Public Service and prescribed offices) and public bodies (including statutory authorities, State business corporations, and Court Services Victoria).
Accountable officers and chief finance officers. Sections 43A-43F set out specific financial management responsibilities for boards, accountable officers, and chief finance officers of departments, public bodies, and declared bodies.
The Treasurer and relevant Ministers. The Treasurer (who is also the Minister for this Act) has powers over the Consolidated Fund, Public Account, budget management, and directives to public bodies. Section 7 allows delegation and section 8 allows Ministerial directions.
Victorian Government Purchasing Board. Established by Part 7A (section 54A) to develop and administer supply policies governing government procurement. The Board has a separate governance structure, membership, and reporting obligations.
Key obligations
Reporting obligations (Part 7). Each department and public body must prepare a report of operations (section 48) and financial statements (section 49) for each financial year, which must be tabled in Parliament or transmitted to Parliament within the prescribed periods (section 46). The annual financial report under section 24 consolidates the State's aggregate financial position.
Quarterly, mid-year, and pre-election reports. The Treasurer must prepare and publish quarterly financial reports (section 26), mid-year financial reports (section 25), and pre-election budget updates (section 27). These are transparency and accountability mechanisms intended to provide regular financial disclosure outside the annual budget cycle.
Financial policy objectives statements (section 23E). The Treasurer must prepare two financial policy objectives and strategies statements for each financial year: one in association with the budget and one in association with the budget update.
Estimated financial statements (section 23H). As part of the budget, the Treasurer must prepare estimated financial statements for the financial year, setting out forecast financial position.
Budget report if likely to exceed appropriation (section 44C). Departments and public bodies must report to the Treasurer if they are likely to exceed their appropriated budget.
Risk disclosure (sections 44AC-44AD). Chief finance officers must provide information on material risks.
Powers and discretions
Ministerial directions (section 8). The Minister may give directions to accountable officers and other persons in the exercise of powers and performance of functions under the Act. This is a broad power to require compliance with financial management standards.
Transfer between appropriation items (sections 30-31A). The Treasurer may approve transfers between items within departmental or Parliamentary appropriations in specified circumstances, providing flexibility to reallocate funding within a financial year.
Temporary advances (sections 35-36). Parliament may authorise temporary advances from the Public Account before Parliamentary sanction is obtained for urgent claims. These advances must not exceed 0.5% of total appropriations and must be paid back immediately Parliamentary sanction is obtained.
Reduction of future payment appropriations (section 34). Where amounts applied in one financial year are no longer needed for future payments, the Minister may reduce the corresponding future appropriation.
Gender impact assessments (section 40AA). A body designated under section 40AAB may be required to include gender impact assessments in its budget estimates.
Government indemnities (Part 6A). The State may indemnify directors of public bodies (section 40C) and statutory authorities (section 40D) for liabilities arising from their public duties. Indemnities may be charged for (section 40F).
Guarantee charges (Part 6B). Where the State guarantees financial accommodation provided to public bodies, the guaranteed party must pay a guarantee charge calculated by multiplying the financial accommodation amount by the prescribed rate (section 40K).
Penalties and enforcement
The Act does not create criminal offences for financial mismanagement. Enforcement is administrative: the Treasurer and Ministers may give directions under sections 8 and 51, require additional information or financial statements under sections 51-52, and direct public bodies to comply with supply policies under section 54K.
Failure to comply with reporting obligations does not attract penalty units in the Act; the sanction is primarily reputational and political (through Parliamentary scrutiny of reports). The Auditor-General has separate powers under the Audit Act 1994 (Vic) to examine financial statements and the accounts of the State.
Process and timelines
Annual budget cycle. The budget is presented to Parliament by the Treasurer, accompanied by the first financial policy objectives and strategies statement (section 23E), estimated financial statements (section 23H), and annual budget estimates (section 40). The annual appropriation Act gives legal authority for expenditure.
Budget update (section 23L). A mid-year budget update must be prepared covering the period from the start of the financial year to a specified date.
Annual financial report (section 24). The Treasurer must prepare a consolidated annual financial report for the whole of government. Section 46 sets out tabling requirements for the reports.
Quarterly financial report (section 26). Published after each quarter. Section 27E governs release.
Mid-year financial report (section 25). Required by the Act and transmitted to Parliament.
Pre-election budget update (section 27-27C). Required to be released before an election, disclosing the current financial position and forecast. Section 27DA provides that information in the pre-election update used in preparing materials for non-parliamentary purposes is protected from certain FOI-related disclosure.
Annual procurement report (section 54M). The Victorian Government Purchasing Board must prepare an annual report.
Interactions with other law
Audit Act 1994 (Vic). The Auditor-General's audit functions operate over the financial statements prepared under this Act. The FMA and Audit Act work together to create the financial accountability and audit framework for the Victorian public sector.
Public Administration Act 2004 (Vic). The definition of department in section 3 of the FMA incorporates the department definition from the Public Administration Act. Department Heads under the 2025 amendments are tied to that Act's structure.
State Owned Enterprises Act 1992 (Vic). Public bodies include State business corporations and State bodies within the meaning of the SOE Act. These bodies are subject to the FMA's accountability and reporting framework.
Court Services Victoria Act 2014 (Vic). Court Services Victoria and the Courts Council are expressly included in the public body definition and have their own transfer provisions (section 31A).
Gender Equality Act 2020 (Vic). The definition of gender equality in section 3 of the FMA cross-references the Gender Equality Act 2020. The 2024 amendment to section 23D(1)(da) requires the Government to consider and promote gender equality in its spending and taxing policies.
Borrowing and Investment Powers Act 1987 (Vic). The definition of financial accommodation in section 3 refers to this Act, governing the Part 6B guarantee charge regime.
Banking Act 1959 (Cth). The definition of authorised deposit-taking institution in section 3 cross-references this Act, relevant to the investment and temporary advance provisions.
Gotchas
Gender equality principles added to financial management in 2024. Section 23D(1)(da), inserted by No. 21 of 2024, requires the Government to consider and promote gender equality and inclusivity in its spending and taxing policies. Section 23D(3) (also new) requires this to take into account intersectional disadvantage based on Aboriginality, age, disability, ethnicity, gender identity, race, religion, and sexual orientation. This is a substantive legal principle binding on the Government in its budget decisions, not merely an aspiration.
Temporary advances are tightly capped. Section 35(1) limits temporary advances to 0.5% of total appropriations. This is a hard limit; exceeding it would be ultra vires. The advances must be repaid immediately when Parliamentary sanction is obtained.
Pre-election budget update protection from FOI. Section 27DA protects information used in the preparation of non-parliamentary materials from FOI obligations in some circumstances. Parties seeking financial documents around election periods need to understand this interaction with the FOI regime.
Budget updates and financial statements can be delayed or waived. Section 23E(4) allows the Treasurer to forgo the second financial policy objectives statement if a pre-election budget update is released on or after 15 September and before 15 December. Section 52A allows the Minister to dispense with certain financial statements in prescribed circumstances.
Practical examples
Department exceeding its appropriation. A Victorian Government department forecasts in October that it will likely exceed its approved budget for the financial year. Under section 44C, the accountable officer must report this to the Treasurer. The Treasurer may approve a transfer between items under section 30 or seek supplementary appropriation. If additional funding cannot be found, the department must manage spending within the appropriated amount.
Government guaranteeing public body borrowing. The Treasurer agrees to guarantee a $500 million bond issued by a public body. Under Part 6B, the public body must pay an annual guarantee charge calculated by multiplying its outstanding liability by the prescribed rate (section 40K(2)(b)). The charge is payable by 31 December following each financial year.
Pre-election release of financial update. As an election approaches, the Treasurer must release a pre-election budget update under Division 6 of Part 5 if Parliament is dissolved or expires. The update must disclose the current financial position and assess forecast financial statements for the current and three subsequent financial years (sections 27A-27C). This is designed to ensure fiscal transparency to voters and parties before an election.