Federal Financial Relations (General purpose financial assistance) Determination 2009 No. 5 (August)

Overview

The Federal Financial Relations Act 2009 was enacted to formalise and operationalise the new federal financial relations framework as agreed under the Intergovernmental Agreement on Federal Financial Relations. This Act addresses the need for a structured and transparent financial support system for the states, facilitating the delivery of public services and enabling economic and social reforms. Enacted by the Parliament of Australia, the policy objective of the Act is to provide ongoing financial assistance to the states, including general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments, thereby supporting national policy initiatives and reforms. The Act ensures that the financial assistance provided to the states is transparent and accountable, with the Minister's determinations being registered on the Federal Register of Legislative Instruments. This legislative framework was established to commence on 1 January 2009, providing a stable financial base for states to undertake their service delivery efforts and implement nationally significant reforms.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Minister for Finance and the States, establishing the framework for the distribution of financial assistance from the Commonwealth to the States. The Act facilitates the provision of ongoing financial support to the States, including general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. These payments are intended to support the States' service delivery efforts, facilitate reforms, and reward jurisdictions that deliver on nationally significant reforms. The Act applies to the entire Commonwealth of Australia and is administered in accordance with the Intergovernmental Agreement on Federal Financial Relations. Determinations made by the Minister regarding general purpose financial assistance are legislative instruments registered on the Federal Register of Legislative Instruments, though they are exempt from disallowance to ensure the Minister can meet their obligations under the Agreement. The Act commenced on 1 January 2009, marking the beginning of the new federal financial relations framework.

Key Provisions

The Federal Financial Relations Act 2009 (sections 9 and 10) outlines the framework for the Minister to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States. This assistance is to be in the form of general revenue assistance, excluding GST revenue grants. The Act specifies that these payments are intended to support the States' service delivery efforts for any purpose, thereby ensuring flexibility in the utilisation of these funds. The Minister's determinations regarding the provision of this assistance are legislative instruments and will be registered on the Federal Register of Legislative Instruments. Importantly, these determinations are not subject to disallowance, which allows the Minister to meet the commitment under the Intergovernmental Agreement for the provision of general purpose financial assistance in a prescribed manner. The Act imposes several obligations on the Minister and the States. The Minister is required to make payments of general purpose financial assistance in accordance with the Intergovernmental Agreement, ensuring that the payments are credited to the COAG Reform Fund and used for the intended purposes. The Act also mandates that the Minister's determinations regarding these payments be registered on the Federal Register of Legislative Instruments, enhancing transparency and accountability. The States, on the other hand, must ensure that the funds received are used for legitimate service delivery efforts, adhering to the conditions and purposes outlined in the Intergovernmental Agreement. Failure to comply with these obligations may result in legal consequences. Breach of the provisions outlined in the Federal Financial Relations Act 2009 could lead to civil or criminal penalties, although the Act itself does not explicitly state the maximum penalties. The consequences of non-compliance could include legal action by the Commonwealth against the States for misuse of funds or failure to meet the obligations of the Intergovernmental Agreement. Additionally, the States could face financial repercussions such as the withholding of future payments or other financial penalties imposed by the Commonwealth. It is important for both the Minister and the States to adhere to the Act's provisions to avoid such outcomes. In summary, the Federal Financial Relations Act 2009 sets out the framework for the provision of general purpose financial assistance to the States through the COAG Reform Fund. The Act mandates that these payments be made in a prescribed manner, enhancing transparency and accountability. The Minister has an obligation to credit the Fund and register the determinations on the Federal Register of Legislative Instruments, while the States must use the funds for legitimate service delivery efforts. Non-compliance with these obligations could result in legal, civil, or financial consequences, underscoring the importance of adherence to the Act's provisions.