EXPLANATORY STATEMENT
Federal Financial Relations ACt
Federal Financial Relations (General purpose financial Assistance) Determination No. 18 (September 2010)
The Intergovernmental Agreement on Federal Financial Relations provides a robust foundation for collaboration on policy development and service delivery, and facilitates the implementation of economic and social reforms in areas of national importance.
In agreeing the new framework for federal financial relations, the Commonwealth committed to the provision of on‑going financial support for the States’ service delivery efforts through:
• general purpose financial assistance, including the on‑going provision of GST payments, to be used by the States for any purpose;
• National Specific Purpose Payments (National SPPs) to be spent in the key service delivery sectors; and
• National Partnership payments to support the delivery of specified outputs or projects, to facilitate reforms or to reward those jurisdictions that deliver on nationally significant reforms.
The new federal financial framework commenced on 1 January 2009. The payment provisions of the Intergovernmental Agreement are implemented through the Federal Financial Relations Act 2009
General purpose financial assistance
The Federal Financial Relations Act 2009 provides for the Minister to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States in the form of general revenue assistance other than GST revenue grants.
• The COAG Reform Fund Act 2008 established the COAG Reform Fund and specifies that it is a Special Account for the purposes of the Financial Management and Accountability Act 1997.
To improve transparency, the Minister’s determinations in respect of general purpose financial assistance are legislative instruments and will be registered on the Federal Register of Legislative Instruments, but will not be disallowable.
• This clarifies that determinations made by the Minister under subsection 9(1) would not otherwise be legislative instruments within the meaning of section 5 of the Legislative Instruments Act 2003.
• The Minister has an obligation under the Intergovernmental Agreement to make payments of general purpose financial assistance in a prescribed manner. Exemption from the disallowance provisions will allow the Minister to meet this obligation.
Commencement
The determination commences on the day it was made.
Overview
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 18, enacted in 2010, aims to formalise the ongoing financial support provided by the Commonwealth to the States under the Intergovernmental Agreement on Federal Financial Relations. This legislation is a legislative instrument under the Federal Financial Relations Act 2009, established by the Parliament of Australia, to ensure the continuation of financial assistance to states in the form of general revenue assistance, excluding GST revenue grants. This determination addresses the need for a clear framework for the provision of financial assistance that supports the states in their service delivery efforts and aligns with the policy objective of improving transparency and accountability in financial dealings between the Commonwealth and the States. The Minister's determinations regarding general purpose financial assistance are not subject to disallowance, allowing for the seamless continuation of payments as agreed under the Intergovernmental Agreement.
Scope and Application
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 18, which supplements the Federal Financial Relations Act 2009, applies to the Commonwealth Minister who is responsible for administering the COAG Reform Fund. This Act facilitates the transfer of general purpose financial assistance to the States for any purpose, excluding GST revenue grants, as part of the broader framework for federal financial relations in Australia. This assistance is intended to support the States' service delivery efforts, ensuring they have the necessary resources to operate effectively. The Act's jurisdictional reach encompasses the Commonwealth and the States, as it pertains to the intergovernmental agreements established under the Intergovernmental Agreement on Federal Financial Relations. The Act does not specify exclusions or exemptions beyond the exclusion of GST revenue grants from the general purpose financial assistance. The application of this Act extends through subordinate instruments that specify the manner in which these financial assistances are to be provided, ensuring compliance with the obligations set out in the Intergovernmental Agreement.
Key Provisions
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 18 sets out key provisions regarding general purpose financial assistance under the Federal Financial Relations Act 2009. This assistance, which is intended to support state service delivery efforts, is provided through the COAG Reform Fund (section 9). The Minister for Finance is tasked with crediting amounts to this fund to provide general revenue assistance to the states, excluding GST revenue grants. This is a legislative instrument, meaning it is subject to registration on the Federal Register of Legislative Instruments but is exempt from disallowance provisions, ensuring the Minister can continue to make the prescribed payments under the Intergovernmental Agreement on Federal Financial Relations.
The obligations under this determination require the Minister to credit amounts to the COAG Reform Fund to facilitate the provision of general purpose financial assistance. This assistance is intended to support the states' service delivery efforts in a flexible manner, allowing the states to use the funds for any purpose. The COAG Reform Fund is established under the COAG Reform Fund Act 2008 as a Special Account for the purposes of the Financial Management and Accountability Act 1997, ensuring robust oversight and accountability mechanisms are in place. The Minister must ensure these funds are credited in a manner that aligns with the commitments made under the Intergovernmental Agreement on Federal Financial Relations.
Breach of the obligations outlined in this determination could potentially lead to legal consequences, although specific offences, penalties, or consequences are not detailed in the determination itself. The legislative framework around the COAG Reform Fund and the Federal Financial Relations Act 2009 provides the necessary oversight and accountability measures to ensure compliance. Given the importance of this funding mechanism for state service delivery, adherence to the outlined obligations is crucial. While the determination does not specify maximum penalties for breaches, any failure to comply could be subject to scrutiny under broader legislative provisions governing financial management and accountability.