Federal Financial Relations (General Purpose Financial Assistance) Determination No. 118 (December 2018)

Overview

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 118 was made in December 2018, establishing the parameters for the distribution of general purpose financial assistance from the Commonwealth to the States and Territories under the Federal Financial Relations Act 2009. This legislation was introduced to facilitate collaborative policy development and service delivery between the Commonwealth and the States, as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA). The IGA was the result of extensive consultations among the States and was agreed upon by the Council of Australian Governments on 29 November 2008. The primary aim of the determination is to ensure that the Commonwealth meets its obligation to provide general purpose financial assistance in a manner consistent with the IGA. The total amount of general purpose financial assistance credited to the COAG Reform Fund for the 2018-19 financial year must not exceed $5 billion, and this limit has not been exceeded as of the date of the determination. The determination outlines specific payments, such as compensation for the impact on royalties of excise amendment for Western Australia, assistance for the Australian Capital Territory's municipal services, and royalties from the North West Shelf oil and gas project. The determination was made by the Treasurer and is exempt from disallowance provisions to ensure that the Commonwealth's obligations under the IGA are met.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 118 applies to the Commonwealth government, the States and Territories, and specifically addresses the distribution of general purpose financial assistance through the COAG Reform Fund, as outlined in the Federal Financial Relations Act 2009 and the Intergovernmental Agreement on Federal Financial Relations. This legislation is designed to facilitate the transfer of funds from the Commonwealth to the States and Territories, adhering to the terms and conditions stipulated in the Intergovernmental Agreement. The funds are intended for a range of purposes as decided by each State or Territory, which may include supporting service delivery and addressing specific fiscal impacts such as the compensation for lost royalty revenue. The geographic reach of this determination is national, encompassing all States and Territories within Australia, as it is integral to the federal financial relations framework. While the determination sets out the manner and conditions of these financial transfers, it does not specify particular exclusions or thresholds, leaving the discretion of the allocation and use of funds to the individual jurisdictions. The determination is exempt from disallowance, ensuring that the Commonwealth's obligation to provide financial assistance is upheld.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 118 (December 2018) outlines the procedures and conditions under which general purpose financial assistance is provided by the Commonwealth to the States. The main sections of the determination include provisions for the crediting of funds to the COAG Reform Fund (section 7(2) of the COAG Reform Fund Act 2008), the setting of terms and conditions for financial assistance (Schedule D to the Intergovernmental Agreement), and the imposition of a debit limit on the total amount that can be credited for such assistance in a financial year (subsection 9(3) of the Federal Financial Relations Act 2009). The determination ensures that the assistance is provided in a manner consistent with the obligations under the Intergovernmental Agreement on Federal Financial Relations (IGA). The obligations imposed by the Act on the parties include the requirement for the Commonwealth to credit an amount to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States. The terms and conditions of this assistance must be set out in a written agreement between the Commonwealth and the States, in accordance with the provisions of the COAG Reform Fund Act 2008 and the IGA. Additionally, the Act mandates that the total amount debited from the COAG Reform Fund for general purpose financial assistance in a financial year must not exceed $5,000,000,000.00. The determination also includes specific payment arrangements for general purpose financial assistance, such as compensation for the impact on royalties of excise amendment for Western Australia, support for municipal services in the Australian Capital Territory, and assistance related to royalties from offshore petroleum projects. The Act does not explicitly outline specific offences, penalties, or consequences for breach within the determination itself. However, the Commonwealth's obligation to provide general purpose financial assistance as per the IGA suggests that failure to comply with the terms and conditions could result in legal or political repercussions, as the IGA is a binding agreement among the parties. Any significant non-compliance could potentially affect the broader framework of federal financial relations and intergovernmental agreements. The determination operates under the exemption from the disallowance provisions of the Legislation Act 2003, ensuring that the Commonwealth can meet its obligations without the risk of the determination being disallowed.