Federal Financial Relations (General Purpose Financial Assistance) Determination No. 115 (September 2018)

Overview

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 115 was enacted in 2018 to provide a framework for the distribution of general purpose financial assistance to the states in Australia. This Determination is a legislative instrument that implements the Intergovernmental Agreement on Federal Financial Relations (IGA), which was agreed upon by the Council of Australian Governments on 29 November 2008. The IGA was developed following extensive consultation with the states and is designed to foster collaboration between the Commonwealth and the states in policy development and service delivery. The Federal Financial Relations Act 2009 allows the Minister to credit an amount to the COAG Reform Fund for the purpose of providing this assistance. The amounts are then debited from the fund and disbursed to the states in accordance with the terms and conditions specified in the IGA. The Determination ensures that the Commonwealth meets its obligations under the IGA, and it is not subject to disallowance as it is exempt under the Legislation Act 2003. The policy objective of the Federal Financial Relations (General Purpose Financial Assistance) Determination No. 115 is to ensure the efficient and effective allocation of general purpose financial assistance to the states, in accordance with the terms and conditions set out in the IGA. This Determination allows for the disbursement of funds to the states to compensate for specific financial impacts, such as the loss of royalty revenue, or to assist in meeting the additional municipal costs associated with being the national capital. The Determination also specifies the debit limits for general purpose financial assistance, ensuring that the total amount credited to the COAG Reform Fund does not exceed the prescribed amount. The determination commenced on the day it was made, and it is registered on the Federal Register of Legislation.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 115 (September 2018) applies to the Commonwealth of Australia, its agencies and entities, and the states and territories of Australia. The determination governs the provision of general purpose financial assistance as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA), which was agreed upon by the Council of Australian Governments on 29 November 2008. This agreement provides a framework for collaboration between the Commonwealth and the states on policy development and service delivery. The determination specifies the terms and conditions for the provision of general purpose financial assistance, including the total amount that can be credited to the COAG Reform Fund for grants in the financial year starting on 1 July 2018, which must not exceed $5,000,000,000.00. The determination also outlines the specific purposes for which general purpose financial assistance is provided, such as compensating Western Australia for lost royalty revenue due to excise changes and assisting the Australian Capital Territory in meeting municipal costs due to its role as the national capital. The determination does not specify exclusions or exemptions, but it does note that the determination is exempt from the disallowance provisions of the Legislation Act 2003 to ensure the Commonwealth's obligation under the IGA is met. Subordinate instruments may extend or restrict the application of this determination.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 115, made under the Federal Financial Relations Act 2009, outlines the terms for general purpose financial assistance provided by the Commonwealth to the States and Territories. The operative sections, such as section 7(2) of the COAG Reform Fund Act 2008, require that the terms and conditions of financial assistance be set out in a written agreement between the Commonwealth and the States. This agreement, detailed in Schedule D to the Intergovernmental Agreement on Federal Financial Relations, specifies the payment conditions for various assistance payments, including compensation for excise amendment impacts, municipal services in the ACT, and royalties from uranium mining and offshore petroleum projects. Importantly, subsection 9(3) of the Federal Financial Relations Act 2009 sets a debit limit of $5,000,000,000.00 for general purpose financial assistance in the 2018-19 financial year, with the current total payments not exceeding this limit. The Act imposes several obligations on the parties involved. The Commonwealth must credit a specified amount to the COAG Reform Fund to facilitate these grants, while the States must comply with the conditions set out in the written agreement. Additionally, the Treasurer must ensure that the payments are made in accordance with the Intergovernmental Agreement, which is exempt from disallowance provisions to uphold this obligation. The determination requires the Commonwealth to distribute funds to the States according to the outlined purposes and conditions, ensuring transparency and adherence to agreed-upon terms. Failure to comply with the obligations or conditions set forth in the determination can lead to various consequences. Although the determination itself is not disallowable, breaches of the underlying agreements or misuse of funds could result in legal actions or disputes. The Commonwealth and the States must ensure that the financial assistance is used in accordance with the specified purposes, and any misuse may have administrative or legal ramifications. The precise nature of penalties or consequences for non-compliance is not detailed in the explanatory statement, but they may include financial penalties, corrective actions, or further legal proceedings depending on the severity and nature of the breach.