Financial Management (Transitional Provisions) Act 2006

The central concept of the Act is continuation by deeming. Rather than requiring every existing trust account, operating account or Treasurer’s Instruction to be re-approved under the new FM Act, the Act declares that each such instrument continues in effect as if it were made under the corresponding provision of the FM Act or the Auditor General Act. This avoids immediate administrative disruption but carries a risk: the deeming is only as good as the match between the old and new provisions. The Act addresses mismatches in a few specific cases. For example, a trust statement for the Hospital Fund under the FAA Act continues under the FM Act but with a fictional amendment to FM Act s 17(1)(a) to make it read differently (Sch 2 cl 5(2)). This bespoke treatment suggests that the drafters anticipated that generic deeming would not always work.

Another key concept is the distinction between the Consolidated Fund and the Consolidated Account. The Constitution Act 1889 s 64 originally established the Consolidated Fund. Part 2 of this Act (the amendment provisions, now omitted from the reprint) amended the Constitution Act to replace the Consolidated Fund with the Consolidated Account. Schedule 2 cl 13 defines both terms and provides that references to the Consolidated Fund in any written law or document may be read as references to the Consolidated Account where the context requires. This is not an automatic substitution; it is a permissive reading rule that depends on context. The practical effect is that parliament did not automatically change every mention of “Consolidated Fund” in all legislation; instead, the onus is on the reader to determine whether context requires the substitution. This creates interpretive uncertainty, especially in older statutes that refer to the Consolidated Fund in ways that may not map neatly onto the Consolidated Account concept.

A third concept is the continuing effect of Treasurer’s Instructions subject to inconsistency. Under Sch 2 cl 10, old Treasurer’s Instructions continue, but only to the extent they are not inconsistent with the FM Act. This means that agencies cannot simply rely on pre-existing instructions; they must compare each instruction with the new FM Act to detect inconsistencies. If an inconsistency exists, the instruction is ineffective to that extent. This imposes a compliance burden on agencies to audit all existing Treasurer’s Instructions against the new Act. The same applies to exemptions provided by Treasurer’s Instructions or written directions.

The Act also introduces the concept of transitional regulations with limited retroactivity. Schedule 2 cl 14 allows the Governor to make regulations that are taken to have existed from a day earlier than publication, but not earlier than the commencement day. This power is explicitly constrained: it cannot operate to affect prejudicially the rights of any person other than the State or an authority of the State, nor can it impose liabilities on any person other than the State or an authority of the State in respect of anything done before publication. This is a standard protection against unfair retroactive rule-making. However, the limitation only protects “persons (other than the State or an authority of the State)”. The State and its authorities can be prejudiced by retroactive transitional regulations. This may be relevant where the regulations alter financial arrangements that affect State revenue or expenditure.

Finally, the power to amend subsidiary legislation by regulation (Sch 2 cl 15) is a notable delegation of legislative power. The Governor, on the Treasurer’s recommendation, may amend regulations, rules, by-laws or other subsidiary legislation made under any Act if each amendment is necessary or desirable as a consequence of the FM Act, the Auditor General Act 2006 or this Act. This power is not limited to financial statutes; it extends to subsidiary legislation under “any Act”. It is also not time-limited; the power appears to remain available indefinitely, though the ground for exercise is limited to consequential amendments. This raises questions about the scope of executive power to rewrite delegated legislation without going through the parent Act’s amendment procedures. The clause also preserves the ability to amend subsidiary legislation under the Act under which it was made (cl 15(3)), so this is an additional mechanism, not an exclusive one.

The Act directly affects Western Australian Government departments, agencies, statutory authorities, and officers responsible for public financial administration. Specifically, the following groups are affected:

• Treasurer and Treasury officials: They must determine which of their previous determinations (prescribed revenue, investment income, etc.) continue and ensure they are consistent with the FM Act. They also have a role in recommending transitional regulations (Sch 2 cl 15(2)) and may issue directions about trust statements (cl 5(1)).
• Departments and agencies operating accounts: Operating accounts established under FAA Act s 15B automatically become agency special purpose accounts under FM Act s 16(1)(a) (Sch 2 cl 6). The accountants and finance officers running these accounts need to know that the legal basis of their accounts changed on the commencement day, even if the account numbers and banking arrangements remain the same.
• Agencies holding trust accounts: Trust accounts forming part of the old Trust Fund under FAA Act s 9 continue as either Treasurer’s special purpose accounts or agency special purpose accounts under the FM Act. The classification matters because the FM Act imposes different rules on each type (e.g., s 10 for Treasurer’s special purpose accounts, s 16 for agency special purpose accounts). Agencies must know which category their account falls into.
• Anyone with a bank account under Treasurer’s authorisation: Bank accounts maintained under an authorisation given under FAA Act s 21 are deemed to be maintained under FM Act s 13 (Sch 2 cl 7). Notably, if the account did not form part of the Public Bank Account immediately before commencement, it continues not to form part of it. This preserves existing arrangements but means that the FM Act s 13 provisions about the Public Bank Account do not fully apply to those accounts.
• Anyone relying on Treasurer’s Instructions: All persons subject to Treasurer’s Instructions (which include all agencies and their officers) must now look to the new FM Act s 78 as the source of those instructions, and must check for inconsistency with the FM Act.
• Legislators and parliamentary committees: The transition from the Consolidated Fund to the Consolidated Account may affect parliamentary oversight, as the constitutional and statutory provisions governing the Fund have changed. The old FAA Act’s reporting and audit requirements are replaced by those in the FM Act and the Auditor General Act 2006.
• The private sector: Indirectly, individuals and businesses that contract with the State or receive payments from the State may be affected if transitional regulations or changed financial administration alter payment processes. However, the Act does not impose direct duties on private parties. The protection in Sch 2 cl 14(3) against prejudicial effect on persons other than the State is relevant here.
• Subsidiary legislation makers: Bodies that have made regulations or by-laws under other Acts may see those regulations amended by regulation under Sch 2 cl 15 without going through the parent Act’s normal amendment process. This affects those who rely on subsidiary legislation for certainty.

The Act does not affect the Auditor General directly except through the application of the Interpretation Act provisions treating Part III of the FAA Act as re-enacted by the Auditor General Act 2006. The Auditor General’s powers and duties continue under the new Act.

The Act does not create many new duties or rights; its function is to preserve existing ones across the legislative transition. The key duties and rights that arise from the Act are:

• Duty to recognise continued instruments: Officers administering state finances have a duty to treat continuing determinations, accounts, statements and instructions as if they were made under the new FM Act. This is not discretionary; the Act says they “continue to have effect” or “are taken” to be maintained under the new provisions. Failure to recognise a continued trust account or operating account could lead to administrative error.
• Right to rely on continued instruments: Agencies and their officers are entitled to rely on the continued validity of pre-existing approvals and accounts without needing fresh authorisation from the Treasurer. For example, a department operating an account under the old operating account provision does not need to apply again; it continues by force of law.
• Duty to check for inconsistency with FM Act: Under Sch 2 cl 10(3), a continued Treasurer’s Instruction or exemption does not have effect to the extent of any inconsistency with the FM Act. This imposes an obligation on agencies to review all existing Treasurer’s Instructions against the FM Act to identify provisions that have been overridden. The same duty applies to any exemption provided by a direction under FAA Act s 58(3)(e).
• Right to contextually interpret references: The Act permits references in written laws to the FAA Act to be read as references to the FM Act or the Auditor General Act where the context requires (Sch 2 cl 11). Similarly, references to the Consolidated Fund may be read as references to the Consolidated Account (cl 13(2)). This is a right to interpret, but it is permissive (the provision says “may, where the context so requires, be read as if it had been amended”). The decision that context requires such a reading lies with the person interpreting the document. In litigation, a court would determine the correct reading.
• No right to prevent transitional regulations that are retroactive: The Governor may make transitional regulations that operate retrospectively from a day earlier than publication (Sch 2 cl 14(2)). However, any person other than the State or an authority of the State has a right not to be prejudiced in their existing rights or to have liabilities imposed for things done before publication (cl 14(3)). This means a private contractor cannot have their contractual rights stripped away by a retroactive transitional regulation, but an agency or the State itself can. Agencies potentially have a right to be consulted if their finances are affected, but the Act does not create such a right.
• Right of the Treasurer to recommend amendments to subsidiary legislation: The Act gives the Treasurer a right (in the sense of power) to recommend amendments to subsidiary legislation under any Act (cl 15(2)). This is a discretionary power; the Treasurer may choose to exercise it.
• Protection against retrospective penalisation: Although not stated in these terms, the combined effect of the Interpretation Act application (cl 2) and the limitation on transitional regulations (cl 14(3)) is that no person can be criminally liable under the new Act for conduct that occurred before the commencement if it was lawful under the old Act. This is a standard rule against retrospectivity.

There are no private rights of action created by this Act. It is wholly about the machinery of government financial administration.

The Financial Management (Transitional Provisions) Act 2006 does not itself contain any penalty provisions. Enforcement mechanisms for financial management offences are found in the FM Act and the Auditor General Act 2006. The transitional Act’s role is to ensure that conduct that was regulated under the old FAA Act continues to be regulated under the new Acts without a gap. The Act does, however, have implications for enforcement in two respects.

First, through the application of the Interpretation Act 1984 ss 16, 36 and 38 (via Sch 2 cl 2), the usual savings apply. Section 16 of the Interpretation Act provides that the repeal of a written law does not affect any penalty, forfeiture or punishment incurred in respect of any offence committed before the repeal. Proceedings for such offences may be instituted and continued as if the repealed law remained in force. This means that enforcement actions that were underway under the FAA Act on the commencement day can continue under the old Act despite its repeal. The transitional Act does not displace this standard rule.

Second, any transitional regulations made under Sch 2 cl 14 may prescribe penalties for contravention of those regulations. The Act does not limit the penalty that may be prescribed; it only limits retroactive operation to prevent prejudice to non-State persons. It is possible that transitional regulations could create new offences or penalties for matters arising during the transition. The power to make regulations includes “prescribing all matters that are required, necessary or convenient to be prescribed for providing for the matter or issue” (cl 14(1)). This power is broad but must be exercised within the scope of transitional necessity.

Enforcement of the FM Act and the Auditor General Act will depend on their own penalty provisions. For example, the FM Act contains offences relating to unauthorised expenditure and misuse of public money. The transitional Act does not modify those penalties. It merely ensures that the legal framework under which officers operate is continuous.

The Act also affects the enforceability of Treasurer’s Instructions. Because old instructions continue subject to inconsistency (cl 10(3)), an officer who complies with a pre-existing instruction that is inconsistent with the FM Act may still be in breach of the FM Act. The officer cannot rely on the instruction as a defence if it is inconsistent. This creates a potential enforcement trap: officers may continue following old instructions without realising they have been overridden. The burden is on agencies to identify and rectify inconsistencies proactively.

The Act’s primary interaction is with the Financial Management Act 2006 and the Auditor General Act 2006. It is the bridge between these new Acts and the repealed FAA Act. The Act expressly applies the Interpretation Act 1984 ss 16, 36 and 38 as if the FAA Act were repealed and re-enacted in two parts (Sch 2 cl 2). This means the following standard interactions apply automatically:

• References in other written laws: Section 36 of the Interpretation Act deals with references to a repealed written law. It provides that any reference in another written law to a provision of the repealed Act is, unless the contrary intention appears, to be construed as a reference to the corresponding provision of the new Act. Because cl 2(1)(a) applies this as if Part II of the FAA Act were re-enacted by the FM Act, references to FAA Act Part II provisions in other laws will generally be read as references to the FM Act. Similarly, references to FAA Act Part III provisions will be read as references to the Auditor General Act 2006. The transitional Act further adds cl 11 (references to the FAA Act may be read as references to one or both new Acts) and cl 13 (references to the Consolidated Fund may be read as references to the Consolidated Account). These are supplementary to the Interpretation Act provisions.
• Pendings proceedings: Section 38 of the Interpretation Act saves pending proceedings under the repealed Act. This ensures that court cases, arbitrations or administrative proceedings that were started under the FAA Act continue.
• Offences: As noted above, s 16 of the Interpretation Act preserves penalties for offences committed before repeal.

The Act also interacts with the Constitution Act 1889. Schedule 2 cl 13 defines the Consolidated Account as the account established by the Constitution Act 1889 s 64 as amended under Part 2 of this Act. Part 2 (the amendment provisions, now omitted from the reprint) amended the Constitution Act to replace the Consolidated Fund with the Consolidated Account. The transitional Act thus gives effect to a constitutional change by providing that references to the old fund may be read as references to the new account.

Interaction with the Treasurer’s Advance Authorisation Act is addressed by Sch 2 cl 12. Authorisations given under that Act for a financial year continue as authorisations under FM Act ss 27 and 28. This prevents a break in the authority to make payments and advances.

The power to amend subsidiary legislation (Sch 2 cl 15) allows the Governor to amend regulations, rules and by-laws made under any Act. This overrides the normal amendment procedures in those Acts. For example, regulations under the Public Health Act could be amended by transitional regulations if the Treasurer considers it necessary as a consequence of the FM Act. This broad power could potentially create conflicts with the policy intent of the parent Act, though the enabling ground is limited to consequential amendments.

Finally, the Act interacts with the Reprints Act 1984. The provisions of Divisions 2, 3, 4 and 5 of Part 2 of this Act, and Schedule 1, have been omitted from the reprint under the Reprints Act s 7(4)(e) because they have had effect and are spent. This means the current compiled version (Reprint 1) only contains the repeal (s 3), the transitional provisions (s 19 and Sch 2), and the short title and commencement. The amendment provisions that changed other Acts are no longer in force; they have done their work.

The Act was originally enacted as the Financial Legislation Amendment and Repeal Act 2006 (No. 77 of 2006). It received Royal Assent on 21 December 2006. Section 18 of that Act later amended its own short title to Financial Management (Transitional Provisions) Act 2006. The compilation table in the Act notes this amendment.

The Act commenced in stages. Sections 1 and 2 commenced on the date of assent (21 December 2006). The operative provisions (s 3 (repeal of FAA Act), s 19 (transitional provisions) and Schedule 2) commenced on 1 February 2007, as proclaimed (see Gazette 19 January 2007 p. 137). The other provisions of the Act (the amendment provisions in Divisions 2-5 of Part 2 and Schedule 1) also commenced on 1 February 2007.

The Act was reprinted as Reprint 1 as at 18 May 2007. This reprint omitted the spent amendment provisions under the Reprints Act 1984 s 7(4)(e). What remains is the core transitional scheme.

One item of subsidiary amendment: The Statutes (Repeals and Minor Amendments) Act 2009 (No. 46 of 2009) s 8, which commenced on 4 December 2009, deleted Schedule 1 cl 122 which had not yet come into operation. This was a clean-up deletion.

There are no subsequent amending Acts affecting the transitional provisions themselves. The Act is now essentially static; it has done its job of bridging the transition and remains in force only for continuing effect of the deeming provisions and the ongoing powers (transitional regulations and amendment of subsidiary legislation). The powers in cls 14 and 15 are not time-limited and remain available.

The Act itself has generated no reported litigation. A search of relevant case law databases (as of the knowledge cut-off) reveals no judicial consideration of the Financial Management (Transitional Provisions) Act 2006. This is unsurprising; the Act is machinery legislation that operates automatically and is unlikely to give rise to disputes. The deeming provisions are straightforward and contain limited scope for interpretive controversy.

Potential litigation could arise in two areas. First, disputes about whether a particular old determination or instruction is inconsistent with the FM Act (Sch 2 cl 10(3)) could come before the courts if an agency or officer faces enforcement action under the FM Act. A court might need to decide the extent of inconsistency. Second, the permissive reading rules in cls 11 and 13 could be litigated if a party argues that a reference to the FAA Act or the Consolidated Fund in a contract or legislation should not be read as referring to the new Acts or the Consolidated Account. Courts would apply standard interpretive principles aided by s 36 of the Interpretation Act.

The limitation on transitional regulations (Sch 2 cl 14(3)) that prohibits prejudicial effect on non-State persons might be tested if a regulation retroactively affects contractual rights of a private contractor. However, no such challenge has been recorded.

Given the Act’s age (over 17 years at the time of writing) and its technical nature, it is likely that most transitional issues have been resolved administratively and the Act is now dormant except for the ongoing powers. The absence of litigation suggests the drafting was effective in achieving continuity.

Several provisions in the Act carry traps for the unwary.

• Inconsistency between old Treasurer’s Instructions and the FM Act: Sch 2 cl 10(3) provides that a continued Treasurer’s Instruction does not have effect to the extent of any inconsistency with the FM Act. This is not a repeal of the instruction; it is a partial suspension. An officer who continues to follow an old instruction without checking the FM Act may be acting without lawful authority. The burden is on every agency to identify and cease applying inconsistent instructions. There is no grace period or transitional period during which outdated instructions are deemed compliant. This is a compliance trap because many agencies may assume the old instructions remain fully operative.

• Retroactive transitional regulations can prejudice the State: Sch 2 cl 14(3) only protects “any person (other than the State or an authority of the State)”. The State and its authorities can be prejudiced by retroactive regulations. This means the Government could use the regulation-making power to retrospectively change financial arrangements that disadvantage a particular agency, provided no private person is affected. Agencies should be aware that the transitional regulation power could override their existing financial positions.

• Perpetual regulation-making power: The Governor’s power to make transitional regulations (cl 14) is not limited in time. Although the power is described as “transitional”, there is no sunset clause. Theoretically, regulations could be made years after the commencement day to deal with a matter that the Schedule “does not provide sufficiently” for. This creates uncertainty because the scope of the power is not temporally confined. Similarly, the power to amend subsidiary legislation (cl 15) is not time-limited.

• The deemed amendment to FM Act s 17(1)(a) for the Hospital Fund: Sch 2 cl 5(2) provides that for the purposes of the continued trust statement for the Hospital Fund, FM Act s 17(1)(a) is taken to be amended to read as set out. This is a fictional amendment that applies only to that specific trust statement. Any person relying on the FM Act for general purposes could be misled if they do not realise that the printed version of s 17(1)(a) is not the version that applies to the Hospital Fund trust statement. This is an odd drafting technique that introduces complexity.

• Bank accounts not in the Public Bank Account: Sch 2 cl 7(2) provides that a bank account continued under cl 7(1) that did not form part of the Public Bank Account before commencement continues not to form part of it, despite FM Act s 13. This means some bank accounts will operate outside the centralised Public Bank Account indefinitely, even though the FM Act expects all authorised bank accounts to form part of it. Agencies with such accounts may need to check if they are in compliance with the broader FM Act policy, even if the transitional provision expressly permits the exception.

• Perissive reading rules not automatic: Cl 12 (references to the FAA Act may be read as references to the FM Act or Auditor General Act) and cl 13(2) (references to Consolidated Fund may be read as references to Consolidated Account) use the word “may”. This is permissive, not mandatory. A court or decision-maker may decide that the context does not require such a reading. This creates interpretive risk. For example, a contract that references the “Consolidated Fund” might be interpreted as still referring to the now-repealed constitutional fund, not the current account, if the context suggests the parties intended the old definition.

• The defined term “FAA Act”: The term is defined in Sch 2 cl 1(1) as the Financial Administration and Audit Act 1985. If this Act is read in isolation, it is clear. However, in cross-references to the FAA Act within the transitional provisions, the reader must remember that the FAA Act is repealed. The Act uses language like “under the FAA Act section 6” which is a reference to a repealed Act. This is correct but could confuse readers unfamiliar with the transitional scheme.

• No savings for the Trust Fund: The old Trust Fund constituted under FAA Act s 9 is not explicitly continued. Instead, the accounts that formed part of it continue as special purpose accounts. The concept of a single Trust Fund ceases. This may affect how financial reporting categories are understood. Agencies should update their financial statements to remove references to the Trust Fund.

Compliance with the Act is largely passive: the Act itself does not require any positive action from most persons. However, agencies and officers responsible for financial administration should take the following steps to ensure continuity and avoid legal risk.

1. Inventory pre-existing determinations and accounts: Identify all determinations made by the Treasurer under FAA Act ss 6(3)(d), 23A and 39(5) that were in force immediately before the commencement day. These continue as if made under FM Act ss 8(3)(a), 23 and 38(5) respectively. Document them and ensure staff responsible for applying them treat them as FM Act determinations.

2. Map trust accounts and operating accounts: For every trust account that was part of the Trust Fund under FAA Act s 9, determine whether it is now a Treasurer’s special purpose account or an agency special purpose account under the FM Act (Sch 2 cl 4). Operating accounts under FAA Act s 15B automatically become agency special purpose accounts under FM Act s 16(1)(a) (cl 6). Reclassify these accounts in internal records and update delegations and authorisations to reflect the new legal basis.

3. Review bank accounts: Identify any bank account maintained under an authorisation given by the Treasurer under FAA Act s 21. Confirm whether it formed part of the Public Bank Account before commencement. If it did not, note that it continues not to form part of the Public Bank Account (cl 7(2)). If it did, it is deemed to be maintained under FM Act s 13 and is now part of the Public Bank Account. Ensure that account signatories and operational procedures are updated to reference the FM Act.

4. Audit Treasurer’s Instructions: Obtain a complete set of all Treasurer’s Instructions issued under FAA Act s 58 that were in effect immediately before commencement. Compare each instruction with the FM Act and any new instruction issued under FM Act s 78. Identify any provision that is inconsistent with the FM Act. Remove or annotate the inconsistent parts. Staff training should emphasise that continued instructions are only valid to the extent of consistency. Consider obtaining legal advice on borderline cases.

5. Examine trust statements: For any trust statement approved by the Treasurer under FAA Act s 10, determine whether it continues as a special purpose statement or a trust statement under FM Act s 17 (Sch 2 cl 5). If the trust statement relates to the Hospital Fund under the Hospital Fund Act 1930, note the special rule in cl 5(2) that deems an amendment to FM Act s 17. Ensure that the Hospital Fund trust statement is prepared and approved accordingly.

6. Update references in documents: Review all internal policies, procedural manuals, contracts and forms that refer to the FAA Act, the Consolidated Fund, or the Trust Fund. Where the context requires, amend these references to refer to the FM Act, the Auditor General Act 2006, the Consolidated Account, or the relevant special purpose account. Do not assume automatic substitution; apply the permissive reading rule in Sch 2 cl 11 and cl 13(2) only where appropriate.

7. Check Treasurer’s Advance authorisations: If the agency receives payments or advances under a Treasurer’s Advance Authorisation Act, confirm that the authorisation continues under FM Act ss 27 or 28 (Sch 2 cl 12). Ensure that the authorisation is recorded and referenced under the FM Act for the remainder of the financial year.

8. Monitor for transitional regulations: The Governor may make transitional regulations at any time under Sch 2 cl 14. Subscribe to the Gazette to be notified. If such regulations are made, assess whether they affect your agency. Note that they can be retroactive but cannot prejudice the rights of persons other than the State. Agencies may find their financial arrangements altered by these regulations without prior notice.

9. Prepare for possible amendments to subsidiary legislation: The Governor, on the Treasurer’s recommendation, may amend subsidiary legislation under any Act (Sch 2 cl 15). If your agency administers subsidiary legislation (e.g., regulations under a specific Act), be aware that it could be amended without going through the parent Act’s normal amendment process. Maintain contact with the Treasury to stay informed of any proposed amendments.

10. Seek legal advice on interpretive issues: The transitional provisions use “may” for reading references and “where the context so requires” for substituting fund references. If a particular contract or statutory provision uses the old terminology, consider obtaining legal advice on how it should be interpreted post-transition. This is especially important for ongoing financial instruments, trust deeds and interagency agreements that reference the Consolidated Fund or the FAA Act.

The compliance burden is one of audit and updating, not of filing or reporting. No specific forms or deadlines are imposed by this Act. The window of vulnerability is the period between the commencement day and the completion of the review of Treasurer’s Instructions. During that period, officers may inadvertently rely on inconsistent instructions. The safest approach is to assume that all old instructions are potentially inconsistent until proven otherwise.