Legal Research
Legislations
Federal Financial Relations (General Purpose Financial Assistance) Determination No. 127 (September 2019)

Federal Financial Relations (General Purpose Financial Assistance) Determination No. 127 (September 2019)

Administered by Department of the Treasury

Legislation au F2019L01254 In force Legislative Instrument

Select Document

EXPLANATORY STATEMENT

Background

The Intergovernmental Agreement on Federal Financial Relations (the IGA) provides a foundation for collaboration on policy development and service delivery between the Commonwealth and the States and Territories (the States).

Consultation

The IGA was subject to extensive consultation with the States before it was agreed by the Council of Australian Governments on 29 November 2008. The IGA is publicly available on the Council for Federal Financial Relations website.

General purpose financial assistance

All money raised or received by the Commonwealth forms part of the Consolidated Revenue Fund. Legislative authority is required for the Commonwealth to spend money from the Consolidated Revenue Fund. The Public Governance, Performance and Accountability Act 2013 (s 80) provides that, if another Act establishes a special account and identifies the purposes of the account, the Consolidated Revenue Fund is appropriated up to the balance of the account at any point in time for expenditure for the purposes of the account.

In this context, the relevant Act is the COAG Reform Fund Act 2008 which establishes the COAG Reform Fund, a special account which has the purpose of making grants and financial assistance to States and Territories.

The Federal Financial Relations Act 2009 then allows for the Minister (who can be any Treasury portfolio Minister) to credit funds to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States. Once the funds are credited to the COAG Reform Fund they are debited from the Fund to make the grants to the States.

The Treasurer’s determinations in respect of general purpose financial assistance are legislative instruments and are registered on the Federal Register of Legislation, but are not disallowable. The Commonwealth has an obligation under the IGA to make payments of general purpose financial assistance in a prescribed manner. Exemption from the disallowance provisions of the Legislation Act 2003 allows the Treasurer to ensure that this obligation is met.

Payment conditions

Subsection 7(2) of the COAG Act requires that the terms and conditions on which financial assistance is granted through the COAG Reform Fund are to be set out in a written agreement between the Commonwealth and the States. The terms and conditions for general purpose financial assistance are set out in Schedule D to the IGA.

Debit limits

Under subsection 9(3) of the Federal Financial Relations Act 2009, 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 2019 must not exceed $2,083,333,334. This amount is set out in Supply Act (No. 2) 2019-20 and is an interim provision for general purpose financial assistance expenditure until the Appropriation Bills for 2019-20 are passed.

The total amount determined for general purpose financial assistance payments to date in the 2019-20 financial year does not exceed the debit limit.

Commencement

The determination commenced on the day it was made.

Summary of relevant agreements for general purpose financial assistance

Payment title	Purpose	Relevant agreement
Compensation for impact on royalties of excise amendment	The Commonwealth provides general purpose financial assistance to compensate Western Australia for the loss of royalty revenue resulting from the removal in the 2008-09 Budget of the exemption of condensate from crude oil excise.	Schedule D – Payment arrangements of the Intergovernmental Agreement
ACT Municipal Services	The Commonwealth provides general purpose financial assistance to the Australian Capital Territory to: • assist in meeting the additional municipal costs which arise from Canberra's role as the national capital; and • compensate the Australian Capital Territory for additional costs resulting from the national capital planning influences on the provision of water and sewerage services.	Schedule D – Payment arrangements of the Intergovernmental Agreement
Royalty payment — Offshore Petroleum and Greenhouse Gas Storage Act 2006	The Commonwealth provides general purpose 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 off the coast of Western Australia. The Commonwealth collects these royalties because it has jurisdiction over off‑shore areas. These royalties will be shared between the Commonwealth (approximately one third) and Western Australia (approximately two thirds). These payment arrangements are in accordance with section 75 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006.	Schedule D – Payment arrangements of the Intergovernmental Agreement
Transitional GST top-up payments	To assist the states in transitioning to the new horizontal fiscal equalisation system, the Commonwealth is providing short‑term top‑up payments, until 2021‑22, to ensure that no state has an effective GST relativity below 0.7 (or 4.66024 for the Northern Territory). The Commonwealth provided Western Australia with $434 million of its 2019-20 top-up payment in 2018-19. The payment in this determination constitutes the remainder of the top-up payment, in accordance with the bilateral agreement between the Australian Government and Western Australia.	Western Australia Goods and Services Tax Top-up Agreement

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

It is difficult to assess the human rights compatibility of either the determination or the making of payments of general purpose financial assistance, as the amounts paid to each State can be used for any purpose. Generally, payments will promote multiple human rights by supporting service delivery in a range of policy areas, at the discretion of each State. Consequently, neither this determination nor the making of general purpose financial assistance payments more generally could be said to have a detrimental impact on any human right.

Overview

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 127, enacted in 2019, serves to facilitate the provision of general purpose financial assistance to the States and Territories under the Intergovernmental Agreement on Federal Financial Relations (IGA). This determination addresses the need for a clear framework governing the disbursement of financial assistance by the Commonwealth to support various state-related initiatives and costs. Enacted by the Commonwealth Parliament, the policy objective of this determination is to ensure that financial assistance is provided in a structured and transparent manner, in accordance with the terms outlined in the IGA. The determination emphasises the importance of adhering to the agreed payment conditions and debit limits set forth in the IGA and the Federal Financial Relations Act 2009. The overarching goal is to maintain harmonious financial relations between the Commonwealth and the States while supporting essential services and infrastructure projects across the nation.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 127 applies to the Commonwealth, States, and Territories, facilitating the distribution of general purpose financial assistance through the COAG Reform Fund, as established under the COAG Reform Fund Act 2008. This funding mechanism is part of the broader framework set by the Intergovernmental Agreement on Federal Financial Relations, ensuring that financial support provided by the Commonwealth to the States adheres to the agreed terms and conditions outlined in the IGA. The determination is instrumental in outlining the specific conditions under which general purpose financial assistance is granted to the States, as required by subsection 7(2) of the COAG Reform Fund Act 2008, and is subject to the oversight and legislative framework provided by the Federal Financial Relations Act 2009. The determination itself is not subject to disallowance, allowing for the seamless implementation of the Commonwealth's obligations under the IGA. The geographic reach of the determination is national, encompassing all States and Territories, while the application is limited to the specific instances of financial assistance outlined in the IGA and the determination itself.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 127 outlines the conditions under which general purpose financial assistance is granted to the States and Territories by the Commonwealth. This assistance is primarily governed by the COAG Reform Fund Act 2008 and the Federal Financial Relations Act 2009 (sections 80 and 9(3), respectively). The Commonwealth credits funds to the COAG Reform Fund for the purpose of providing these grants. The terms and conditions of these financial assistance grants are detailed in Schedule D of the Intergovernmental Agreement on Federal Financial Relations (IGA), which must be set out in a written agreement between the Commonwealth and the States (section 7(2) of the COAG Act). The determination also stipulates that the total amount credited to the COAG Reform Fund for grants in the 2019-20 financial year must not exceed $2,083,333,334, as set out in the Supply Act (No. 2) 2019-20. The obligations imposed by this determination on the Commonwealth include adhering to the specified debit limits for the COAG Reform Fund, ensuring that payments of general purpose financial assistance are made in accordance with the IGA, and providing financial assistance to States for specific purposes as outlined in the agreement. These purposes include compensating Western Australia for the impact of excise amendments on royalty revenue, assisting the ACT with municipal services and planning influences on water and sewerage services, and providing transitional GST top-up payments to support states during the transition to the new horizontal fiscal equalisation system. The Commonwealth must also ensure that these payments are made in a manner that complies with the relevant legislation, including the IGA and the Public Governance, Performance and Accountability Act 2013. Breaches of the obligations outlined in the determination may result in civil or criminal consequences, depending on the severity of the non-compliance. While the determination itself is not subject to disallowance under the Legislation Act 2003, the exemption from disallowance provisions ensures that the Treasurer can meet the Commonwealth's obligations under the IGA. The maximum penalties for breaches of related provisions under the COAG Reform Fund Act 2008 or the Federal Financial Relations Act 2009 are not specified in this determination, but they would typically include fines and other penalties as prescribed by the relevant Acts. The human rights compatibility of the determination and the general purpose financial assistance payments is considered to be positive, as the payments can support service delivery in various policy areas, thereby promoting multiple human rights.

Area of Law: Administrative Law; Finance & Banking Law
Instrument: Legislative Instrument
Concepts: Definitions & Interpretation; Reporting & Disclosure Obligations; Licensing & Registration; Regulatory Standards

Interactions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

Legislation content