Federal Financial Relations (General Purpose Financial Assistance) Determination No. 16 (July 2010)

Overview

The Federal Financial Relations Act 2009 was enacted to implement the financial provisions of the Intergovernmental Agreement on Federal Financial Relations, which was established to provide a robust foundation for collaboration on policy development and service delivery between the Commonwealth and the states. This Act addresses the need for ongoing financial support for states' service delivery efforts, facilitating economic and social reforms in areas of national importance. The enacting body was the Commonwealth Parliament, which committed to providing general purpose financial assistance, including GST payments, National Specific Purpose Payments, and National Partnership payments. The policy objective is to ensure the provision of financial support in a prescribed manner, as outlined in the Intergovernmental Agreement. Determinations made by the Minister regarding general purpose financial assistance are legislative instruments and are registered on the Federal Register of Legislative Instruments, although they are exempt from disallowance to meet the Minister's obligations under the Agreement. The Act establishes the COAG Reform Fund, a Special Account under the Financial Management and Accountability Act 1997, to credit amounts for the purpose of providing general purpose financial assistance to the states. This measure aims to improve transparency by ensuring that the Minister's determinations are recorded and accessible. The Act clarifies that these determinations are legislative instruments but exempts them from disallowance, allowing the Minister to meet the commitment to provide financial support in a prescribed manner as agreed in the Intergovernmental Agreement. The Act's provisions commenced on 1 January 2009, aligning with the start date of the new federal financial framework.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Commonwealth Government and all states and territories in Australia, establishing the framework for ongoing financial support to the States through general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. The Act implements the payment provisions of the Intergovernmental Agreement on Federal Financial Relations, which commenced on 1 January 2009, to facilitate economic and social reforms in areas of national importance. The Act provides for the Minister to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance, which is a legislative instrument registered on the Federal Register of Legislative Instruments and not subject to disallowance, thereby clarifying the Minister’s obligation under the Intergovernmental Agreement. The Act's application is nationwide, covering all states and territories in Australia, and it extends its reach through the subordinate COAG Reform Fund Act 2008, which specifies the fund as a Special Account for the purposes of the Financial Management and Accountability Act 1997.

Key Provisions

The Federal Financial Relations Act 2009, particularly sections 8 and 9, governs the provision of general purpose financial assistance. Section 8 allows the Minister to credit amounts to the COAG Reform Fund for the purpose of providing general revenue assistance to the States, excluding GST revenue grants. This financial assistance is intended to support the States' service delivery efforts. The Minister’s determinations regarding these financial assistance payments are legislative instruments and must be registered on the Federal Register of Legislative Instruments (section 9(1)). However, these determinations are exempt from disallowance, meaning they cannot be overturned by either House of Parliament, allowing the Minister to fulfill the obligation of making payments under the Intergovernmental Agreement without such procedural hindrances (section 9(2)). The commencement of these determinations occurs on the day they are made. The Act imposes specific obligations on the Minister and the States. The Minister is obligated to credit the COAG Reform Fund with the specified amounts of general purpose financial assistance in accordance with the Intergovernmental Agreement (section 8). This obligation ensures that the Commonwealth fulfills its commitment to providing ongoing financial support to the States for their service delivery efforts. The States, on the other hand, are expected to use the general purpose financial assistance for any purpose as agreed upon under the Intergovernmental Agreement, thereby gaining flexibility in managing their budgets and service delivery needs. Breaches of the obligations under the Federal Financial Relations Act 2009 could lead to significant consequences. While the Act does not explicitly detail specific offences or penalties for non-compliance, any failure by the Minister to make the required payments of general purpose financial assistance could be considered a breach of the Intergovernmental Agreement. Such a breach could result in legal challenges or political repercussions. However, the Act does not provide for criminal penalties or civil liabilities within its provisions. Instead, the primary consequence of non-compliance would likely stem from the political and financial implications of not adhering to the terms of the Intergovernmental Agreement.