Federal Financial Relations (General Purpose Financial Assistance) Determination No. 114 (August 2018)

Overview

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 114, made in August 2018, pertains to the allocation of general purpose financial assistance to the states and territories in accordance with the Intergovernmental Agreement on Federal Financial Relations (IGA). This determination was enacted to provide a structured framework for the distribution of financial assistance, ensuring compliance with the obligations set out in the IGA, which was agreed upon by the Council of Australian Governments on 29 November 2008. The Federal Financial Relations Act 2009 mandates the crediting of funds to the COAG Reform Fund for the purpose of disbursing general purpose financial assistance. These funds are subsequently debited from the Fund to facilitate the grants to the states, with the terms and conditions outlined in Schedule D of the IGA. The policy objective is to support policy development and service delivery across various sectors, thereby enhancing collaboration between the Commonwealth and the states. Payments are generally made on the 21st of each month, with extraordinary payments permitted as necessary.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 114 applies to the Commonwealth Government, specifically the Treasurer, who is responsible for making payments of general purpose financial assistance to the States and Territories. This legislation is governed by the Federal Financial Relations Act 2009, which mandates the Minister to credit an amount to the Council of Australian Governments (COAG) Reform Fund for the purpose of providing general purpose financial assistance to the States. These payments are made in accordance with the Intergovernmental Agreement on Federal Financial Relations and the COAG Reform Fund Act 2008. The determination is not subject to disallowance, ensuring the Commonwealth’s obligation to make these payments is met. 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 2018 must not exceed $5 billion, as stipulated by the Federal Financial Relations Act 2009. The geographic reach of this legislation is national, covering all States and Territories of Australia, with payments allocated based on specific agreements detailed in the Intergovernmental Agreement. The funds are used to compensate States for various impacts, such as the loss of royalty revenue or to assist in meeting additional municipal costs. This legislation does not specify exclusions or exemptions but adheres to the terms and conditions set out in the written agreements between the Commonwealth and the States. The amounts of general purpose financial assistance are determined by the Treasurer and are made on the 21st of each month, or the next business day thereafter, unless extraordinary circumstances require otherwise.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 114 (August 2018) outlines the manner in which general purpose financial assistance is provided to the States under the Federal Financial Relations Act 2009 (FFR Act) and the COAG Reform Fund Act 2008 (COAG Act). As per subsection 7(2) of the COAG Act, the terms and conditions for granting financial assistance are detailed in Schedule D to the Intergovernmental Agreement on Federal Financial Relations (IGA). The determination specifies the total amount that can be credited to the COAG Reform Fund for general purpose financial assistance in the 2018-19 financial year, which is capped at $5,000,000,000.00 (section 9(3) of the FFR Act). The determination also details the payment conditions, including the scheduled payment dates and the criteria for making extraordinary payments. The obligations imposed by this determination on the Commonwealth and the States are primarily centered around the transparent and timely disbursement of funds as outlined in the IGA. The Commonwealth is obligated to credit the specified amounts to the COAG Reform Fund and subsequently make the grants to the States, ensuring these payments adhere to the conditions and terms set out in Schedule D. The States, in turn, must use the funds for the purposes agreed upon in the IGA, which may include compensating for revenue impacts or covering municipal service costs. The determination ensures that the payments are made in a timely and consistent manner, typically on the 21st of each month or the next business day if the 21st is not a business day. In terms of consequences for non-compliance, the determination does not explicitly detail specific penalties for breach. However, the obligation to provide general purpose financial assistance is a statutory requirement under the IGA, and failure to comply could potentially lead to legal challenges or disputes between the Commonwealth and the States. The legislation exempts the Treasurer’s determinations from disallowance under the Legislation Act 2003, ensuring that the obligation to provide financial assistance can be met without legislative hindrance. While the determination does not specify maximum penalties for breaches, any failure to comply with the terms set out in the IGA could result in financial disputes or other legal consequences as per the applicable laws governing intergovernmental financial relations.