EXPLANATORY STATEMENT
Federal Financial Relations (General purpose financial assistance) Determination No. 100 (July 2017)
Background
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 and Territories (the States).
When developing this framework, the Commonwealth committed to the provision of on‑going financial support for the States’ service delivery efforts. This includes the provision of National Partnership payments to support the delivery of specified outputs or projects, to facilitate reforms, and to reward jurisdictions that deliver on nationally significant reforms. Under the IGA, National Partnership payments are made on the 7th of each month, or the first business day thereafter. Extraordinary payments can be made if necessary.
The IGA’s payment provisions in respect of National Partnerships are implemented by way of a determination by the Treasurer under section 16 of the FFR Act.
Consultation
The IGA was subject to extensive consultation with the States and was agreed by the Council of Australian Governments on 29 November 2008. The IGA and individual National Partnership agreements are publicly available on the Council for Federal Financial Relations website.
General purpose financial assistance
The FFR Act provides for the Minister to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States. Once the amounts are credited to the COAG Reform Fund they are debited from the fund to make the grants to the States.
The COAG Reform Fund Act 2008 establishes the COAG Reform Fund and specifies that it is a special account for the purposes of the Public Governance, Performance and Accountability Act 2013.
The Treasurer’s determinations in respect of general purpose financial assistance are legislative instruments and are registered on the Federal Register of Legislation, but are not disallowable. The Commonwealth has an obligation under the IGA to make payments of general purpose financial assistance in a prescribed manner. Exemption from the disallowance provisions of the Legislation Act 2003 allows the Treasurer to ensure that this obligation is met.
Payment conditions
Subsection 7(2) of the COAG Act requires that the terms and conditions on which financial assistance is granted through the COAG Reform Fund are to be set out in a written agreement between the Commonwealth and the State.
National Partnerships will clearly set out the payment profile in respect of each State. Where the achievement of pre‑determined milestones or performance benchmarks is required before a payment is made to a State:
(a) in the case of payments to reward nationally significant reforms, the relevant Commonwealth Minister or delegate will make a determination as to whether the incentive payment will be paid following receipt of an independent assessment as to whether a pre-determined performance benchmark has been achieved; and
(b) in the case of payments to facilitate reform and to support the delivery of specified outputs or projects, the relevant Commonwealth Minister or delegate will make a determination, based upon expenditure and performance reporting arrangements set out in the National Partnership, as to whether the facilitation or project payment will be paid.
Where the achievement of a performance benchmark is not required before a payment is made to a State, payments will be scheduled in accordance with the payment profile set out in the National Partnership.
Debit limits
Under subsection 9(3) of the Act, the total amount credited to the COAG Reform Fund for the purpose of making a grant of general purpose financial assistance in the financial year starting on 1 July 2016 must not exceed $5,000,000,000.00.
The amounts specified in Table 1 are the total amounts determined in the 2017-18 financial year in respect of general purpose financial assistance, including this determination.
The total amount determined for general purpose financial assistance payments to date in the 2017-18 financial year does not exceed the debit limit.
Table 1: Total cumulative general purpose financial assistance payments in 2017-18
State |
|
| Amount of General purpose financial assistance | ||
New South Wales |
| - | |||
Victoria |
| - | |||
Queensland |
| - | |||
Western Australia |
| $62,855,808.68 | |||
South Australia |
| - | |||
Tasmania |
| - | |||
Australian Capital Territory |
| $3,296,804.93 | |||
Northern Territory |
| - | |||
Total |
| $66,152,613.61 | |||
Debit limit for 2017-18 |
|
|
| $5,000,000,000.00 | |
Remaining debit limit for 2017-18 |
|
| $4,933,847,386.39 | ||
Commencement
The determination commenced on the day it was made.
Summary of relevant agreements for general purpose financial assistance
Payment title | Purpose | Relevant agreement |
Compensation for impact on royalties of excise amendment | The Commonwealth provides general purpose financial assistance 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. | Schedule D – Payment arrangement of the Intergovernmental Agreement |
ACT Municipal Services | The Commonwealth provides general purpose financial assistance 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. | Schedule D – Payment arrangement of the Intergovernmental Agreement |
Taxation compensation in respect of Snowy Hydro Limited | The Commonwealth provides compensation payments to New South Wales and Victoria, in the form of general purpose financial assistance, for Commonwealth taxes paid by Snowy Hydro Ltd in proportion to the States' shareholdings. Payments are made in accordance with the Snowy Hydro Tax Compensation Deed between the Commonwealth, New South Wales and Victoria. These taxes would have previously been payable to the States through tax equivalence regime payments. | Schedule D – Payment arrangements of the Intergovernmental Agreement |
Royalty payments |
|
|
— Offshore Petroleum and Greenhouse Gas Storage Act 2006 | The Commonwealth provides general purpose financial assistance 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 off‑shore areas. These royalties will be 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. | Schedule D – Payment arrangement of the Intergovernmental Agreement |
Amounts of general purpose financial assistance on 21 JULY 2017 ($)
| NSW | VIC | QLD | WA | SA | TAS | ACT | NT | Total |
General Revenue Assistance |
|
|
|
|
|
|
|
|
|
Compensation for impact on royalties of excise amendment | - | - | - | 2,380,338.59 | - | - | - | - | 2,380,338.59 |
ACT Municipal Services | - | - | - | - | - | - | 3,296,804.93 | - | 3,296,804.93 |
Offshore Petroleum * Greenhouse Gas Storage Act 2006 | - | - | - | 60,475,470.09 | - | - | - | - | 60,475,470.09 |
Total General Revenue Assistance | - | - | - | 62,855,808.68 | - | - | 3,296,804.93 | - | 66,152,613.61 |
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
It is difficult to assess the human rights compatibility of either the determination or the making of National Partnership payments more generally. The amounts paid to each State vary each month as individual States meet milestones and benchmarks under different National Partnership agreements. However, in general, National Partnership payments support multiple human rights by funding service delivery in a wide range of policy areas. Consequently, neither this determination nor the making of National Partnership payments more generally could be said to have a detrimental impact on any human right.