Federal Financial Relations (General Purpose Financial Assistance) Determination No. 120 (February 2019)

Overview

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 120, enacted in February 2019, aims to provide a structured approach to the distribution of general purpose financial assistance among the states and territories of Australia. This determination is issued under the Federal Financial Relations Act 2009, which mandates the Minister to credit an amount to the Council of Australian Governments (COAG) Reform Fund for this purpose. The determination is not subject to disallowance, ensuring the Commonwealth can meet its obligation under the Intergovernmental Agreement on Federal Financial Relations (IGA) to provide such assistance. The amounts provided are used to support various state needs, including compensation for revenue impacts and additional costs associated with municipal services in the Australian Capital Territory. The determination adheres to the terms and conditions specified in the IGA, and the payments are subject to a debit limit set by the Federal Financial Relations Act. The total amount for general purpose financial assistance in the 2018-19 financial year remains well within the prescribed limit, ensuring fiscal responsibility while supporting state-level initiatives.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 120, issued in February 2019, outlines the parameters under which general purpose financial assistance is granted to the states and territories by the Commonwealth. This determination applies to the states and territories of Australia, ensuring that the financial assistance provided through the COAG Reform Fund adheres to the terms and conditions specified in the Intergovernmental Agreement on Federal Financial Relations (IGA). The IGA was developed through extensive consultation and agreement among the Commonwealth and the states and territories, as represented by the Council of Australian Governments (COAG). This assistance is provided to support the general revenue of the states, facilitating policy development and service delivery across various sectors. The determination sets a debit limit of $5,000,000,000.00 for the financial year starting on 1 July 2018, and it ensures that the financial assistance remains within this limit, with the remaining balance for the 2018-19 financial year amounting to $4,326,583,138.32. The determination exempts itself from the disallowance provisions of the Legislation Act 2003, allowing for the Commonwealth’s obligation under the IGA to be fulfilled without the risk of disallowance. The assistance provided is detailed in various schedules and agreements, including compensation for the impact of excise amendments on royalties and assistance for municipal services in the Australian Capital Territory, among others.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 120 of February 2019 outlines the terms and conditions for the Commonwealth's general purpose financial assistance to the States, pursuant to the Federal Financial Relations Act 2009 (FFR Act) and the Intergovernmental Agreement on Federal Financial Relations (IGA). According to subsection 7(2) of the COAG Reform Fund Act 2008, the determination specifies that the terms and conditions for general purpose financial assistance are set out in Schedule D of the IGA. The determination also states that the total amount credited to the COAG Reform Fund for the purpose of making grants of general purpose financial assistance in the 2018-19 financial year must not exceed $5 billion, as per subsection 9(3) of the FFR Act. The obligations under this determination include the establishment of the COAG Reform Fund as a special account for the purpose of providing financial assistance to the States, as specified in the IGA. The determination requires that the terms and conditions of the financial assistance be set out in a written agreement between the Commonwealth and the States, in accordance with subsection 7(2) of the COAG Reform Fund Act 2008. The determination also sets out the debit limits for general purpose financial assistance payments in the 2018-19 financial year, as per subsection 9(3) of the FFR Act. There are no specific offences, penalties, or civil/criminal consequences for breach outlined in the determination. However, the determination notes that it is not subject to disallowance under the Legislation Act 2003, which allows the Treasurer to ensure that the Commonwealth's obligation to make payments of general purpose financial assistance in a prescribed manner is met. The determination also states that it commenced on the day it was made. In summary, the determination sets out the terms and conditions for general purpose financial assistance payments to the States, in accordance with the IGA and the FFR Act. The determination also sets out the debit limits for such payments in the 2018-19 financial year. While there are no specific offences, penalties, or civil/criminal consequences for breach, the determination is not subject to disallowance, which allows the Treasurer to ensure that the Commonwealth's obligation to make payments of general purpose financial assistance in a prescribed manner is met.