Federal Financial Relations (General Purpose Financial Assistance—2025-26 Payment No. 2) Determination 2025

Administered by Department of the Treasury

Legislation au F2025L00939 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. 2) Determination 2025

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. 2) Determination 2025 (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 2001, 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. 2) Determination 2025

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. 2) Determination 2025 (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. 2) Determination 2025

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. 2) Determination 2025 was introduced to determine the amounts of general purpose financial assistance to be paid to the States, the Australian Capital Territory, and the Northern Territory. Enacted under the Federal Financial Relations Act 2009, this legislation provides the necessary legal framework for the Commonwealth to fulfil its obligations under the Intergovernmental Agreement on Federal Financial Relations. The determination ensures that the Commonwealth's grants of general purpose financial assistance are made in accordance with the agreed criteria and conditions established by the IGA. The policy objective is to support collaboration on policy development and service delivery between the Commonwealth and the States, the Australian Capital Territory, and the Northern Territory, while also ensuring that the total amount credited to the Federation Reform Fund for the purpose of making such grants does not exceed the debit limit determined for that financial year. The Determination is not subject to disallowance or sunsetting, reflecting its role as a minor and mechanical instrument within an intergovernmental scheme.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance—2025-26 Payment No. 2) Determination 2025 applies to the payment of general purpose financial assistance to the States, the Australian Capital Territory, and the Northern Territory as per the obligations under the Federal Financial Relations Act 2009. This Determination provides specific amounts to be disbursed to these entities based on the Intergovernmental Agreement on Federal Financial Relations. The instrument is national in scope, encompassing all States and Territories within Australia, and is made under the legislative authority granted by the Federal Financial Relations Act 2009. It does not apply to individual persons or private entities but rather to the public administration of financial assistance as outlined in the IGA. Notably, the Determination is exempt from disallowance and sunsetting provisions, reflecting its role in implementing intergovernmental agreements. The instrument is not subject to disallowance under subsection 9(5) of the FFR Act and subsection 44(1) of the Legislation Act 2001, and it is also exempt from sunsetting under subsection 54(1) of the Legislation Act 2003. The amounts paid are subject to annual appropriation Acts, which set the debit limits for expenditure, ensuring oversight by the Parliament.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance—2025-26 Payment No. 2) Determination 2025 specifies the amounts of general purpose financial assistance to be paid to the States, the Australian Capital Territory, and the Northern Territory under subsection 9(1) of the Federal Financial Relations Act 2009 (FFR Act) (section 5). The determination reflects the Commonwealth’s obligations under the Intergovernmental Agreement on Federal Financial Relations (IGA) to provide grants to the States, the Australian Capital Territory, and the Northern Territory. The Determination gives effect to these obligations by detailing specific payments to be made to each jurisdiction, such as compensating Western Australia for lost royalty revenue from the removal of the condensate excise exemption and providing additional support to the Australian Capital Territory for its role as the national capital (section 5). The Determination imposes obligations on the Commonwealth to make the specified payments to the States, the Australian Capital Territory, and the Northern Territory, provided that these jurisdictions have met the necessary criteria and notified the Commonwealth before the relevant due date for monthly payments (section 5). The payments are to be credited to the Federation Reform Fund, established under the Federation Reform Fund Act 2008, and must not exceed the annual debit limit set by the appropriation Acts (subsection 9(3) FFR Act). This ensures that the payments are subject to parliamentary oversight through the annual appropriation process. There are no specific offences, penalties, or consequences for breach detailed within the Determination itself, as it is a mechanical instrument detailing financial assistance payments based on prior agreements. However, any breach of the conditions under which the assistance is granted could potentially lead to disputes or adjustments in future payments. The Determination itself does not specify civil or criminal penalties for non-compliance, as it is designed to operate within the framework established by the FFR Act and the IGA, which include mechanisms for dispute resolution and adjustments to payments as necessary. The legislative instrument is also exempt from disallowance and sunsetting, reflecting its role in implementing intergovernmental agreements (subsections 9(5) FFR Act and 44(1) and 54(1) Legislation Act 2003). The Determination is compatible with human rights as it does not engage any of the rights or freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. The payments are made under pre-agreed criteria and are intended to support service delivery in various policy areas at the discretion of each State or Territory, generally promoting multiple human rights (Attachment B). The instrument ensures that the payments are subject to parliamentary scrutiny and are made in accordance with the terms of the IGA, which was developed through extensive consultation with the States and Territories.

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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.