Federal Financial Relations (General Purpose Financial Assistance) Determination 2009 No. 1 (April)

Overview

The Federal Financial Relations Act 2009 was enacted to provide a new framework for federal financial relations, improving the collaboration between the Commonwealth and the States in policy development and service delivery. This legislation was introduced to address the need for a more structured and transparent approach to the distribution of financial resources, ensuring that the Commonwealth's financial support is effectively used to facilitate economic and social reforms. The Act was enacted by the Australian Parliament to implement the payment provisions of the Intergovernmental Agreement on Federal Financial Relations, which commenced on 1 January 2009. The policy objective of the Act is to ensure ongoing financial support for the States' service delivery efforts through various forms of financial assistance, including general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments, thereby enhancing the delivery of services and supporting reforms across key sectors.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Minister for Finance, who is responsible for providing general purpose financial assistance to the states. This assistance is part of the broader framework for federal financial relations established under the Intergovernmental Agreement on Federal Financial Relations. The Act enables the Minister to credit amounts to the COAG Reform Fund for the purpose of providing financial support to states in the form of general revenue assistance, excluding GST revenue grants. The Act’s jurisdiction extends across the Commonwealth, ensuring that the provisions apply nationally. Determinations made by the Minister regarding these financial assistance payments are legislative instruments and are registered on the Federal Register of Legislative Instruments; however, they are exempt from disallowance to facilitate the Minister’s obligations under the Intergovernmental Agreement. The Act clarifies that such determinations, while legislative instruments, are not subject to disallowance under the Legislative Instruments Act 2003, thereby streamlining the process for making these payments. The Act commenced on 1 January 2009, aligning with the start date of the new federal financial relations framework.

Key Provisions

The Federal Financial Relations Act 2009, particularly Section 9, outlines the Minister's authority to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States. This assistance is intended to support the States' service delivery efforts and can be used for any purpose, excluding GST revenue grants. It is important to note that these payments are legislative instruments and are subject to registration on the Federal Register of Legislative Instruments. However, unlike other legislative instruments, these determinations are exempt from disallowance provisions, which means they cannot be annulled by a resolution of either House of Parliament (Section 5 of the Legislative Instruments Act 2003). This exemption is crucial to ensure that the Minister can fulfil the commitment to provide ongoing financial support as agreed upon in the Intergovernmental Agreement on Federal Financial Relations. The Act imposes specific obligations on the Minister, who is responsible for determining the amounts to be credited to the COAG Reform Fund. These obligations are detailed under the Intergovernmental Agreement and require the Minister to make payments in a prescribed manner. The establishment of the COAG Reform Fund under the COAG Reform Fund Act 2008 ensures that this fund is a Special Account for the purposes of the Financial Management and Accountability Act 1997, providing a clear framework for the administration and oversight of these financial transfers. The legislative requirement to register these determinations on the Federal Register of Legislative Instruments enhances transparency, allowing the public and stakeholders to track the allocation and use of these funds. Failure to comply with the requirements of the Federal Financial Relations Act 2009 could lead to significant consequences. While the Act does not explicitly outline specific offences or penalties for breaches, the framework under which it operates suggests that non-compliance could potentially lead to legal challenges or administrative actions. For instance, if the Minister fails to make the required payments or does not credit the amounts to the COAG Reform Fund as mandated, this could be seen as a breach of the Intergovernmental Agreement. Such breaches could result in legal proceedings or political consequences, although the exact nature and penalties would depend on the specific circumstances and applicable laws. The Act's emphasis on transparency and accountability underscores the importance of adhering to the prescribed processes and obligations.