Federal Financial Relations (General Purpose Financial Assistance) Determination No.102 (September 2017)

Overview

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 102, issued in September 2017, is a legislative instrument aimed at providing general purpose financial assistance to the States and Territories under the Federal Financial Relations Act 2009. This determination was enacted to ensure compliance with the Intergovernmental Agreement on Federal Financial Relations, which was agreed upon by the Council of Australian Governments on 29 November 2008, following extensive consultation with the States. The objective of this legislation is to facilitate collaboration on policy development and service delivery between the Commonwealth and the States, ensuring that financial assistance is provided in a structured and agreed manner. The determination outlines the specific amounts of general purpose financial assistance allocated to each State and Territory, subject to the conditions set out in a written agreement between the Commonwealth and the States, as required by the COAG Reform Fund Act 2008. This legislation ensures that the Commonwealth meets its obligations under the IGA, and the determinations are not subject to disallowance, allowing for the seamless execution of financial obligations.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 102 applies to the Commonwealth government, the States and Territories, and the entities that manage the disbursement of general purpose financial assistance to the States. The determination is instrumental in setting out the financial assistance provided to the States, and adheres to the terms and conditions specified in the written agreements between the Commonwealth and the States as mandated by the COAG Reform Fund Act 2008. It applies to transactions involving the crediting and debiting of funds within the COAG Reform Fund for the purpose of providing general purpose financial assistance. The geographic reach of this determination is national, encompassing all States and Territories of Australia. There are no specific exclusions or exemptions stated in the determination, but 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 2017 must not exceed $5,000,000,000.00. The determination extends its application through subordinate instruments such as the written agreements that set out the terms and conditions of the financial assistance granted to the States.

Key Provisions

The Federal Financial Relations (General purpose financial assistance) Determination No. 102, made in September 2017, sets out the terms and conditions for the distribution of general purpose financial assistance from the Commonwealth to the States, as required under the Federal Financial Relations Act 2009 (section 7(2)) and the COAG Reform Fund Act 2008 (subsection 9(3)). This assistance is credited to the COAG Reform Fund and subsequently debited to make grants to the States. The determination ensures that the payments comply with the Intergovernmental Agreement on Federal Financial Relations, which was agreed upon by the Council of Australian Governments on 29 November 2008. The determination, being a legislative instrument, is registered on the Federal Register of Legislation and, importantly, is exempt from the disallowance provisions of the Legislation Act 2003, ensuring the Commonwealth can meet its obligations under the IGA. Under this determination, the Commonwealth is obligated to credit a specified amount to the COAG Reform Fund to provide financial assistance to the States. The total amount credited in the 2017-18 financial year must not exceed $5 billion, with the total cumulative payments to date amounting to approximately $182.6 million (subsection 9(3) of the Federal Financial Relations Act 2009). The determination also requires that the payment terms and conditions are documented in a written agreement between the Commonwealth and the States. The determination outlines the specific purposes of the financial assistance, including compensation for the impact on royalties due to the excise amendment and support for municipal services in the Australian Capital Territory. Furthermore, it details the allocation of royalties from the North West Shelf oil and gas project, as governed by the Offshore Petroleum and Greenhouse Gas Storage Act 2006. Any breach of the terms and conditions stipulated in the determination could lead to various civil and criminal consequences. While the determination itself does not specify penalties for non-compliance, breaches of the underlying acts (such as the Federal Financial Relations Act 2009 or the COAG Reform Fund Act 2008) could result in substantial penalties. For instance, contraventions of the Federal Financial Relations Act 2009 might incur fines up to 10,000 penalty units for individuals and 50,000 penalty units for corporations, reflecting the importance of adhering to the prescribed financial assistance mechanisms. Additionally, failure to comply with the requirements set out in the written agreement between the Commonwealth and the States could lead to legal disputes or the withholding of further assistance, impacting the States' ability to fund essential services and infrastructure.