Federal Financial Relations (General Purpose Financial Assistance—2020-21 Payment No. 3) Determination 2020

Administered by Department of the Treasury

Legislation au F2020L01168 In force Legislative Instrument

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EXPLANATORY STATEMENT

Issued by authority of the Minister for Housing and Assistant Treasurer

Federal Financial Relations Act 2009

Federal Financial Relations (General Purpose Financial Assistance—2020-21 Payment No. 3) Determination 2020

Subsection 9(1) of the Federal Financial Relations Act 2009 (the FFR Act) provides that the Minister may determine amounts to be paid to the States, the Australian Capital Territory or the Northern Territory for the purpose of the Commonwealth making grants of general purpose financial assistance.

The purpose of the Federal Financial Relations (General Purpose Financial Assistance—2020-21 Payment No. 3) Determination 2020 (the Determination) is to determine amounts of general purpose financial assistance to be paid to the States, the Australian Capital Territory or the Northern Territory.

The Intergovernmental Agreement on Federal Financial Relations (the IGA) provides a foundation for collaboration on policy development and service delivery between the Commonwealth and the States, the Australian Capital Territory and the Northern Territory. The IGA sets out the terms and conditions on which Commonwealth has agreed to make grants of general purpose financial assistance to the States, the Australian Capital Territory or the Northern Territory.

The Determination gives effect to the Commonwealth’s ongoing obligations under the IGA to make grants of general purpose financial assistance.

By way of background, legislative authority is required for the Commonwealth to spend money from the Consolidated Revenue Fund. The Public Governance, Performance and Accountability Act 2013 provides that, if another Act establishes a special account and identifies the purposes of the account, the Consolidated Revenue Fund is appropriated up to the balance of the account at any point in time for expenditure for the purposes of the account.

In this context, the COAG Reform Fund Act 2008 establishes the COAG Reform Fund, a special account, which has the purpose of making grants and financial assistance to States and Territories.  The FFR Act requires the Minister, following the making of a determination, to credit funds he or she has determined to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States, the Australian Capital Territory or the Northern Territory.

Under subsection 9(3) of the FFR Act, the total amount credited to the COAG Reform Fund for the purpose of making a grant of general purpose financial assistance in a financial year must not exceed the debit limit determined for that year.  The debit limit is set by the annual appropriation Acts. The Determination will not result in total determined amounts for the relevant financial year exceeding the debit limit.

The IGA was subject to extensive consultation with the States and Territories before it was agreed by the Council of Australian Governments on 29 November 2008. The IGA is publicly available on the Council for Federal Financial Relations website. The Determination is minor and machinery in nature and was not subject to further consultation.

Details of the Determination are set out in Attachment A.

The Determination is a legislative instrument for the purposes of the Legislation Act 2003.  In accordance with the Act, the Determination is not subject to disallowance or sunsetting under the Act and the Legislation Act 2003.

The Determination commenced on the day it was registered on the Federal Register of Legislation.

Statement of Compatibility with Human Rights

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

Federal Financial Relations (General Purpose Financial Assistance—2020-21 Payment No. 3) Determination 2020

This 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

The instrument determines amounts of general purpose financial assistance to be paid to the States, the Australian Capital Territory or the Northern Territory.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

It is difficult to assess the human rights compatibility of the making of payments of general purpose financial assistance, as the amounts paid to each State or Territory can be used for any purpose. Generally, payments will promote multiple human rights by supporting service delivery in a range of policy areas, at the discretion of each State or Territory.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

ATTACHMENT A

Details of the Federal Financial Relations (General Purpose Financial Assistance—2020-21 Payment No. 3) Determination 2020

Section 1 – Name of the Determination

This section provides that the name of the Determination is the Federal Financial Relations (General Purpose Financial Assistance—2020-21 Payment No. 3) Determination 2020 (the Determination).

Section 2 – Commencement

The Determination commenced on the day the instrument was registered on the Federal Register of Legislation.

Section 3 – Authority

The Determination is made under the Federal Financial Relations Act 2009 (the Act).

Section 4 – Definitions

This section provides definitions are that used in the Determination.

Section 5 – Determination of general purpose financial assistance

This section specifies amounts to be paid to each of the States, the Australian Capital Territory and the Northern Territory as grants of general purpose financial assistance.

In addition to the goods and services tax revenue grants provided to the States, the Australian Capital Territory and the Northern Territory as grants of general purpose financial assistance under Division 1 of Part 2 to the Act, the Commonwealth, by way of the Determination, also pays grants of general purpose financial assistance for the following:

•                 to compensate Western Australia for the loss of royalty revenue resulting from the removal in the 2008-09 Budget of the exemption of condensate from crude oil excise;

•                 to the Australian Capital Territory to:

–               assist in meeting the additional municipal costs which arise from Canberra's role as the national capital; and

–               compensate the Australian Capital Territory for additional costs resulting from the national capital planning influences on the provision of water and sewerage services;

•                 to Western Australia from royalties payable under the Offshore Petroleum (Royalty) Act 2006 in respect of the North West Shelf oil and gas project off the coast of Western Australia. The Commonwealth collects these royalties because it has jurisdiction over offshore areas. These royalties are shared between the Commonwealth (approximately one third) and Western Australia (approximately two thirds). These payment arrangements are in accordance with section 75 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006; and

•                 to assist the States and Territories in transitioning to the new horizontal fiscal equalisation system (the Commonwealth is providing short term top up payments, until 2021-22, to ensure that no State or Territory has an effective GST relativity below 0.7 (or 4.66024 for the Northern Territory).

Overview

The Federal Financial Relations (General Purpose Financial Assistance—2020-21 Payment No. 3) Determination 2020, enacted by the Australian Parliament, addresses the ongoing obligation of the Commonwealth to provide general purpose financial assistance to the States, Australian Capital Territory, and Northern Territory. The determination is made under the Federal Financial Relations Act 2009 and aligns with the Intergovernmental Agreement on Federal Financial Relations, which outlines the terms and conditions for these grants. The objective is to facilitate collaboration and service delivery between the Commonwealth and the states, ensuring that funds are allocated to support various policy areas as determined by each state or territory. The Determination specifies the amounts to be paid to each jurisdiction, including compensation for specific revenue losses and additional costs associated with the national capital, thereby fulfilling the Commonwealth’s commitment under the IGA. This legislative instrument is minor and machinery in nature, and it ensures compliance with the set debit limits for the financial year, which are determined by the annual appropriation Acts.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance—2020-21 Payment No. 3) Determination 2020 applies to the States, the Australian Capital Territory, and the Northern Territory, specifying the amounts of general purpose financial assistance to be paid to these entities. This determination is a legislative instrument made under the Federal Financial Relations Act 2009, which mandates the Minister to credit funds determined for general purpose financial assistance into the COAG Reform Fund. The geographic reach of this Act is national, involving collaboration between the Commonwealth and the various states and territories of Australia. Notably, the Determination does not exceed the debit limit set by the annual appropriation Acts for the relevant financial year, ensuring compliance with budgetary constraints. The amounts determined are intended to fulfill the Commonwealth’s obligations under the Intergovernmental Agreement on Federal Financial Relations, addressing issues such as the loss of royalty revenue for Western Australia, additional costs for the Australian Capital Territory as the national capital, and payments related to the North West Shelf oil and gas project. Additionally, the Determination provides short-term top-up payments to support the transition to the new horizontal fiscal equalisation system. The instrument is minor and machinery in nature and, as such, does not require further consultation. The Determination is not subject to disallowance or sunsetting under the Legislation Act 2003 and commenced on the day it was registered on the Federal Register of Legislation.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance—2020-21 Payment No. 3) Determination 2020 sets out the specific amounts of general purpose financial assistance to be paid to the States, the Australian Capital Territory, and the Northern Territory (sections 1 and 5). This Determination is made under the authority of the Federal Financial Relations Act 2009 (section 3) and comes into effect on the day it was registered on the Federal Register of Legislation (section 2). The Determination specifies the grants provided to each jurisdiction, including compensation for Western Australia's loss of royalty revenue due to the removal of the condensate exemption from crude oil excise in the 2008-09 Budget, additional support to the Australian Capital Territory to meet municipal costs and compensate for national capital planning influences on water and sewerage services, and payments from royalties collected from the North West Shelf oil and gas project off the coast of Western Australia, in accordance with section 75 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006. Additionally, the Determination provides short-term top-up payments to States and Territories to support the transition to the new horizontal fiscal equalisation system, ensuring no jurisdiction has an effective GST relativity below 0.7 (or 4.66024 for the Northern Territory) (section 5). The Act imposes several obligations on the Minister for Housing and Assistant Treasurer. Primarily, the Minister is required to credit funds determined under the Determination to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States, the Australian Capital Territory, and the Northern Territory (subsection 9(1) of the FFR Act). This process ensures that the funds are directed towards their intended recipients in accordance with the terms of the Intergovernmental Agreement on Federal Financial Relations (IGA). The Minister must also ensure that the total amount credited to the COAG Reform Fund for the purpose of making a grant of general purpose financial assistance in a financial year does not exceed the debit limit determined for that year, as set by the annual appropriation Acts (subsection 9(3) of the FFR Act). This requirement ensures fiscal responsibility and adherence to the appropriations made by Parliament. Breaches of the provisions outlined in the Determination may have legal consequences, although the Determination itself does not explicitly outline specific offences, penalties, or consequences for non-compliance. Generally, failure to adhere to the terms of the Determination or the underlying IGA could lead to legal challenges or disputes regarding the distribution of funds. However, the primary mechanism for enforcing compliance with the Determination would likely involve political and administrative oversight rather than direct legal penalties. Given that the Determination is a legislative instrument, it is not subject to disallowance or sunsetting under the Legislation Act 2003, reinforcing its legal standing and the importance of its provisions being followed. The Statement of Compatibility with Human Rights confirms that the Determination does not engage any of the applicable rights or freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Statement of Compatibility with Human Rights). It is noted that the human rights implications of the payments are difficult to assess as the funds can be used for any purpose by the States or Territories. Nonetheless, the payments are generally expected to support service delivery in various policy areas, thereby promoting multiple human rights indirectly. The Conclusion reiterates that the Determination is compatible with human rights as it does not raise any human rights issues.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.