Federal Financial Relations (General Purpose Financial Assistance) Determination No.101 (August 2017)

Overview

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 101 was enacted in August 2017 by the Australian Government. This determination was introduced to provide a structured framework for the allocation of general purpose financial assistance to the States and Territories, as stipulated by the Intergovernmental Agreement on Federal Financial Relations (IGA). This Agreement, which was agreed upon by the Council of Australian Governments (COAG) on 29 November 2008, serves as the foundation for collaboration on policy development and service delivery between the Commonwealth and the States. The determination ensures that payments are made in compliance with the IGA and the COAG Reform Fund Act 2008. The determination outlines the conditions for payments, including the requirement for certain payments to be contingent upon the achievement of pre-determined performance benchmarks. Furthermore, the determination specifies that the total amount credited to the COAG Reform Fund for general purpose financial assistance in the 2017-18 financial year must not exceed $5 billion. This legislative instrument was registered on the Federal Register of Legislation and is not subject to disallowance, ensuring that the Commonwealth can meet its obligations under the IGA.

Scope and Application

The Federal Financial Relations (General purpose financial assistance) Determination No. 101 (August 2017) applies to the provision of general purpose financial assistance from the Commonwealth to the States and Territories, as mandated by the Intergovernmental Agreement on Federal Financial Relations (IGA). This assistance is directed towards compensating the States for certain financial impacts, such as the loss of royalty revenue from excise amendments and compensating for additional municipal costs arising from Canberra's role as the national capital. The determination ensures that the Commonwealth credits specified amounts to the COAG Reform Fund for distribution to the States, subject to the conditions and benchmarks outlined in written agreements between the Commonwealth and the States. The amounts credited must not exceed the set debit limit of $5,000,000,000.00 for the 2017-18 financial year, with the remaining limit being $4,876,724,564.60 after the determination. These payments are made in accordance with the National Partnership agreements, with certain payments contingent upon achieving predetermined milestones or performance benchmarks. The determination is not subject to disallowance, ensuring the Commonwealth's obligation under the IGA is met. The application of this determination is national, covering all States and Territories of Australia, as it pertains to the distribution of financial assistance as per the IGA. The scope includes the various types of general purpose financial assistance payments such as compensation for the impact on royalties of excise amendment, ACT Municipal Services, taxation compensation in respect of Snowy Hydro Limited, and royalties from the Offshore Petroleum and Greenhouse Gas Storage Act 2006. Each of these payments is outlined in the Schedule D of the IGA, which details the specific payment arrangements for each State. The determination also clarifies that the amounts paid to each State vary based on the achievement of specific benchmarks and milestones. Notably, the determination itself does not specify any exclusions or exemptions, but rather follows the conditions and limits set by the COAG Reform Fund Act 2008 and the IGA.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 101 (August 2017) establishes the terms and conditions for the provision of general purpose financial assistance to the States by the Commonwealth through the COAG Reform Fund. The determination requires that written agreements, such as National Partnerships, set out the payment profiles and conditions for each State (section 7(2) of the COAG Reform Fund Act 2008). These agreements may include requirements for achieving predetermined milestones or performance benchmarks before payments are made (subsection 7(2) of the COAG Act). Payments for incentivising nationally significant reforms depend on independent assessments of performance benchmarks, while payments to facilitate reform or support projects depend on expenditure and performance reporting (subsection 7(2) of the COAG Act). The determination also sets a debit limit of $5 billion for the 2017-18 financial year, ensuring that total credits to the COAG Reform Fund do not exceed this amount (subsection 9(3) of the Federal Financial Relations Act 2009). The obligations imposed by this determination include the requirement for the Commonwealth to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States. The amounts credited must comply with the terms and conditions specified in the written agreements, such as National Partnerships. Additionally, the Commonwealth must ensure that the total credits to the COAG Reform Fund do not exceed the debit limit set for the financial year. The States, on the other hand, are obligated to meet the milestones and benchmarks specified in the National Partnerships to receive the financial assistance. Any breach of the terms and conditions outlined in the determination may result in civil or administrative consequences, such as the withholding of financial assistance. However, the determination does not explicitly outline criminal penalties for breach. The Commonwealth's obligation to provide general purpose financial assistance is exempt from the disallowance provisions of the Legislation Act 2003, ensuring that this obligation can be met without the risk of disallowance. The determination provides clarity on the payment conditions, debit limits, and the human rights compatibility of the general purpose financial assistance provided by the Commonwealth to the States.