Federal Financial Relations (General Purpose Financial Assistance—2025-26 Payment No. 12) Determination 2026

Administered by Department of the Treasury

Legislation au F2026L00735 In force Legislative Instrument

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EXPLANATORY STATEMENT

Issued by authority of the Assistant Minister for Productivity, Competition, Charities and Treasury

Federal Financial Relations Act 2009

Federal Financial Relations (General Purpose Financial Assistance—2025-26 Payment No. 12) Determination 2026

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—2025-26 Payment No. 12) Determination 2026 (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 Federation Reform Fund Act 2008 establishes the Federation Reform Fund, a special account, which has the purpose of making grants of 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 Federation 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 Federation 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 former Council of Australian Governments on 29 November 2008. The IGA is publicly available on the 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 subsection 9(5) of the FFR Act and subsection 44(1) of the Legislation Act 2003, the Determination is not subject to disallowance. The Determination is also not subject to sunsetting under subsection 54(1) of the Legislation Act 2003. The exemptions for disallowance and sunsetting are provided 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, further the annual appropriation Bills also include annual debit limits for amounts that may be spent under the delegated general purpose financial assistance or national partnership payments under the FFR Act. The debit limits provide an effective mechanism to limit the expenditure of public money under the Determination and ensures that there is alternative Parliamentary scrutiny of such arrangements.

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

A statement of Compatibility with Human Rights is at Attachment B.

ATTACHMENT A

Details of the Federal Financial Relations (General Purpose Financial Assistance—2025-26 Payment No. 12) Determination 2026

Section 1 – Name of the Determination

This section provides that the name of the Determination is the Federal Financial Relations (General Purpose Financial Assistance—2025-26 Payment No. 12) Determination 2026 (the Determination).

Section 2 – Commencement

The Determination commenced immediately after it 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; and

•                 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.

General purpose financial assistance is provided based on that State or Territory having satisfied the necessary agreed criteria, and having notified the Commonwealth prior to the relevant due date for monthly payments to the states and territories.


ATTACHMENT B

 

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—2025-26 Payment No. 12) Determination 2026

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.

Overview

The Federal Financial Relations (General Purpose Financial Assistance—2025-26 Payment No. 12) Determination 2026 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 is made under the authority of the Assistant Minister for Productivity, Competition, Charities and Treasury and is pursuant to subsection 9(1) of the Federal Financial Relations Act 2009. The overarching objective of this legislation is to fulfil the Commonwealth's obligations under the Intergovernmental Agreement on Federal Financial Relations by making grants of general purpose financial assistance to the States, the Australian Capital Territory, and the Northern Territory. The determination is a mechanical implementation of the intergovernmental agreement, detailing specific payments that are contingent on the satisfaction of pre-agreed criteria and valid appropriations by the Parliament. The instrument ensures that payments are made within the annual debit limits set by the appropriation Acts, thus maintaining fiscal responsibility and parliamentary oversight.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance—2025-26 Payment No. 12) Determination 2026 applies to the States, the Australian Capital Territory, and the Northern Territory as recipients of general purpose financial assistance grants from the Commonwealth government. This Determination provides specific amounts to be paid to each jurisdiction as part of the ongoing grants of general purpose financial assistance agreed upon under the Intergovernmental Agreement on Federal Financial Relations. The Determination is made under the authority of the Federal Financial Relations Act 2009 and gives effect to the Commonwealth's obligations under the IGA. The amounts are determined based on the criteria set out in the IGA and the satisfaction of specific conditions by each jurisdiction. Importantly, the Determination ensures that the total amounts credited to the Federation Reform Fund do not exceed the debit limit set by the annual appropriation Acts, thereby providing a mechanism for parliamentary scrutiny of public expenditure. The Determination is not subject to disallowance or sunsetting, reflecting its nature as an intergovernmental agreement implementation instrument. It is also noted that this legislative instrument is compatible with human rights, as it does not engage any of the rights or freedoms recognised in the applicable international instruments.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance—2025-26 Payment No. 12) Determination 2026 primarily serves to specify the amounts of general purpose financial assistance to be paid to the States, the Australian Capital Territory, and the Northern Territory (Section 5). This determination is made under the Federal Financial Relations Act 2009 (FFR Act) and details specific payments in addition to the standard goods and services tax revenue grants. These additional payments include compensation for Western Australia due to the loss of royalty revenue from the removal of the condensate exemption from crude oil excise, support for the Australian Capital Territory to meet additional municipal costs arising from Canberra's role as the national capital, and compensation for the Australian Capital Territory for additional costs resulting from national capital planning influences on water and sewerage services. Additionally, the Determination specifies payments to Western Australia from royalties collected under the Offshore Petroleum (Royalty) Act 2006 for the North West Shelf oil and gas project off the coast of Western Australia. The Determination imposes several obligations on the Commonwealth, primarily ensuring that the payments are made in accordance with the Intergovernmental Agreement on Federal Financial Relations (IGA) and that they comply with the annual appropriation Acts, which include setting debit limits for such payments (subsection 9(3) of the FFR Act). The Commonwealth is also required to credit the funds determined to the Federation Reform Fund for the purpose of providing these grants. Each State and Territory must notify the Commonwealth prior to the relevant due date for monthly payments and must have satisfied the necessary criteria agreed upon in the IGA to be eligible for these payments. The Determination itself does not impose specific offences or penalties for breach; however, the underlying legislation, the FFR Act, and other relevant Acts provide for various civil and criminal consequences for misuse of funds or non-compliance with legislative requirements. For instance, misuse of funds appropriated for general purpose financial assistance could result in legal action under the Public Governance, Performance and Accountability Act 2013, potentially leading to fines or other penalties as prescribed by law. Additionally, the annual appropriation Acts, which set the debit limits for such payments, include provisions for financial penalties or legal action in cases of overspending or misuse of funds. The Determination is not subject to disallowance or sunsetting, reinforcing the importance of its role in the intergovernmental financial framework.

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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.