Federal Financial Relations (General Purpose Financial Assistance) Determination No.108 (March 2018)

Overview

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 108, made in March 2018, pertains to the provision of general purpose financial assistance under the Federal Financial Relations Act 2009. This determination was enacted to address the need for the Commonwealth to fulfill its obligation, as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA), to provide specific payments to the States for general purposes. The enactment of this determination by the Minister, who may be any Treasury Minister, allows for the crediting of funds to the COAG Reform Fund, established under the COAG Reform Fund Act 2008, for the disbursement of these grants. The IGA, which was agreed upon by the Council of Australian Governments on 29 November 2008, and the associated National Partnership agreements, were subject to extensive consultation and are publicly available. The purpose of these financial assistance payments is to support various policy areas at the discretion of each State, thereby promoting multiple human rights through improved service delivery.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 108 pertains to the Commonwealth's obligation under the Intergovernmental Agreement on Federal Financial Relations to provide general purpose financial assistance to the States. This determination applies to the States and Territories of Australia, and the Commonwealth, specifically the Treasury Minister who is responsible for crediting amounts to the COAG Reform Fund for the purpose of making these grants. The geographic reach of the determination is national, encompassing all States and Territories within the Commonwealth of Australia. The total amount of general purpose financial assistance for the 2017-18 financial year is constrained by a debit limit of $5 billion, and as of March 2018, the total cumulative payments made under this determination were well within this limit. The determination itself does not specify exclusions, exemptions, or thresholds beyond the debit limit, but it does reference the terms and conditions outlined in the written agreements between the Commonwealth and the States, which are set out in Schedule D to the IGA. These agreements detail the specific purposes and amounts of financial assistance for various categories, such as compensation for royalty revenue loss and assistance for municipal services in the ACT. The application of this determination may be extended or restricted through subordinate instruments, such as further determinations or agreements that may be made under the authority of the relevant acts.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 108 (March 2018) outlines the manner in which the Commonwealth government provides general purpose financial assistance to the states and territories under the Intergovernmental Agreement on Federal Financial Relations (IGA). According to section 7(2) of the COAG Reform Fund Act 2008, the terms and conditions of this financial assistance are detailed in a written agreement between the Commonwealth and the States, as specified in Schedule D to the IGA. The determination itself was made under section 9 of the Federal Financial Relations Act 2009 and is not subject to disallowance. This determination imposes several obligations on the Commonwealth and the States. The Commonwealth is required to credit a specified amount to the COAG Reform Fund for the purpose of making grants to the States. This fund is a special account established under the COAG Reform Fund Act 2008. The total amount credited to the COAG Reform Fund for the 2017-18 financial year must not exceed $5 billion, as per subsection 9(3) of the Federal Financial Relations Act 2009. The amounts credited are to be used to provide general purpose financial assistance, which can be spent according to the individual priorities of each state. The States are obligated to use the financial assistance provided by the Commonwealth in accordance with the terms and conditions specified in the IGA. These terms and conditions include the purpose of the assistance, such as compensating Western Australia for the loss of royalty revenue due to the removal of the excise exemption on condensate from crude oil, assisting the ACT in meeting additional municipal costs arising from Canberra's role as the national capital, and compensating the ACT for additional costs due to national capital planning influences on water and sewerage services. Additionally, the Commonwealth provides 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. Breaching the terms and conditions set out in the IGA or failing to comply with the obligations under the Federal Financial Relations (General Purpose Financial Assistance) Determination could have significant consequences. Although the determination itself does not specify explicit offences or penalties for non-compliance, the failure to adhere to the terms of the IGA could potentially lead to disputes or legal actions between the Commonwealth and the States. The IGA, as a formal agreement, would be subject to the dispute resolution mechanisms outlined within it. Additionally, any misuse of the funds that breaches the intended purpose of the financial assistance could be subject to scrutiny and potential legal consequences under relevant financial and accountability laws.