Federal Financial Relations (General Purpose Financial Assistance—2021-22 Payment No. 5) Determination 2021

Administered by Department of the Treasury

Legislation au F2021L01574 In force Legislative Instrument

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EXPLANATORY STATEMENT

Issued by authority of the Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and Community Housing

Federal Financial Relations Act 2009

Federal Financial Relations (General Purpose Financial Assistance—2021-22 Payment No. 5) Determination 2021

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—2021-22 Payment No. 5) Determination 2021 (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 on the grounds that the instrument is part of an intergovernmental scheme and gives effect to agreements between the Commonwealth and each of the States, the Australian Capital Territory and the Northern Territory. The instrument’s operation is effectively mechanical in that it simply details an instalment of financial assistance to be provided to a State or Territory based on that State or Territory having satisfied the necessary agreed criteria. The instrument can only authorise financial assistance being paid to a State or Territory where it has been supported by a valid appropriation enacted by the Parliament.

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—2021-22 Payment No. 5) Determination 2021

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—2021-22 Payment No. 5) Determination 2021

Section 1 – Name of the Determination

This section provides that the name of the Determination is the Federal Financial Relations (General Purpose Financial Assistance—2021-22 Payment No. 5) Determination 2021 (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;

•                 to the Northern Territory in lieu of royalties on uranium mining due to the Commonwealth's ownership of uranium in the Ranger Project Area; 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—2021-22 Payment No. 5) Determination 2021 was enacted to determine the amounts of general purpose financial assistance to be paid to the States, the Australian Capital Territory and the Northern Territory. This Determination was made under the authority of the Federal Financial Relations Act 2009 and gives effect to the Commonwealth's obligations under the Intergovernmental Agreement on Federal Financial Relations, which provides a framework for collaboration between the Commonwealth and the States and Territories. The policy objective of this Determination is to ensure the provision of general purpose financial assistance in accordance with the terms of the IGA, while also addressing specific needs such as compensating Western Australia for the loss of royalty revenue and assisting the Australian Capital Territory with the additional costs arising from its role as the national capital. The Determination is minor and machinery in nature and was not subject to further consultation, reflecting the established and collaborative nature of intergovernmental financial relations in Australia.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance—2021-22 Payment No. 5) Determination 2021 applies to the States, the Australian Capital Territory, and the Northern Territory, establishing specific amounts of general purpose financial assistance to be paid to each of these jurisdictions. This Determination is made under the authority of the Federal Financial Relations Act 2009, which allows the Minister to specify the amounts for these grants. The geographic reach of the Determination is national, affecting all States, the Australian Capital Territory, and the Northern Territory. The Determination ensures that the Commonwealth meets its obligations under the Intergovernmental Agreement on Federal Financial Relations, which outlines the terms for making grants of general purpose financial assistance. The Determination does not include any explicit exclusions or exemptions, but it is contingent upon the appropriation of funds by the Parliament. It also notes that the instrument is not subject to disallowance or sunsetting as it is considered minor and machinery in nature, and it follows an intergovernmental scheme agreed upon by the Council of Australian Governments.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance—2021-22 Payment No. 5) Determination 2021 (the Determination) specifies the amounts of general purpose financial assistance to be paid to the States, the Australian Capital Territory and the Northern Territory (sections 1, 2, 3, 5). This Determination is made under the Federal Financial Relations Act 2009 (the FFR Act) and it details the specific financial assistance amounts to be paid to each jurisdiction based on the terms of the Intergovernmental Agreement on Federal Financial Relations. These payments include compensation for various costs and revenue losses, such as the loss of royalty revenue for Western Australia due to the removal of the condensate exemption from crude oil excise in the 2008-09 Budget and the costs associated with Canberra’s role as the national capital (section 5). Under the FFR Act, the Minister for Housing and Minister for Homelessness, Social and Community Housing is required to credit the funds 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 (subsection 9(3) of the FFR Act). The total amount credited must not exceed the debit limit set for that financial year, as determined by the annual appropriation Acts (subsection 9(3) of the FFR Act). The Determination ensures that these obligations are met in a transparent and structured manner, in line with the commitments made under the Intergovernmental Agreement on Federal Financial Relations. The Determination outlines specific obligations for the Commonwealth in making the grants of general purpose financial assistance to the States, the Australian Capital Territory, and the Northern Territory. These obligations include the calculation and payment of specified amounts to compensate for various costs and revenue losses, as well as supporting the transition to the new horizontal fiscal equalisation system (section 5). Failure to comply with these obligations could potentially lead to legal consequences, as the Determination is underpinned by the legislative authority of the FFR Act. However, the Determination itself does not stipulate specific offences, penalties, or consequences for non-compliance. Any legal repercussions would likely stem from breaches of the FFR Act or other relevant legislation. The Determination itself does not outline specific offences, penalties, or consequences for non-compliance. The primary legal framework governing the obligations and potential consequences of non-compliance lies within the FFR Act and other relevant legislation. Breaches of these legislative requirements could result in legal actions being taken against the Commonwealth or relevant officials, depending on the nature and severity of the non-compliance. The Determination serves to specify the financial assistance amounts and the conditions under which they are to be paid, ensuring that the Commonwealth’s obligations under the Intergovernmental Agreement on Federal Financial Relations are met. The actual enforcement of these obligations and the potential penalties for non-compliance would be addressed within the broader legislative context provided by the FFR Act and associated laws.

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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.