Federal Financial Relations (General Purpose Financial Assistance) Determination No. 26 (May 2011)

Overview

The Federal Financial Relations Act 2009 was enacted to implement the new framework for federal financial relations as agreed under the Intergovernmental Agreement on Federal Financial Relations, which commenced on 1 January 2009. This Act addresses the need for a robust system of financial assistance to support states in their service delivery efforts, encompassing general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. The policy objective is to enhance collaboration between the Commonwealth and the states, thereby facilitating the implementation of economic and social reforms in areas of national importance. The Federal Financial Relations Act 2009 provides the mechanism for the Minister to credit amounts to the COAG Reform Fund for the purpose of offering general purpose financial assistance to the states. This Act also ensures that the Minister's determinations regarding such assistance are legislative instruments, thereby improving transparency, while exempting them from disallowance to allow for the timely and efficient fulfilment of the Minister's obligations under the Intergovernmental Agreement. The determinations made under the Act commence on the day they are made.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Commonwealth Government, the States, and the Australian Capital Territory, as it implements the payment provisions of the Intergovernmental Agreement on Federal Financial Relations. This Act facilitates the provision of ongoing financial support to the States through general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. The Act provides a framework for the Minister to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States, ensuring transparency through legislative instruments that are registered on the Federal Register of Legislative Instruments. Notably, these instruments are exempt from disallowance provisions to allow the Minister to meet the obligation to make payments in a prescribed manner. The Act commenced on 1 January 2009, following the new federal financial framework agreed upon by the Commonwealth, the States, and the Australian Capital Territory. Exclusions and exemptions are limited to the disallowance of legislative instruments, which has been specifically addressed to ensure the Minister can meet the commitment to make payments as required by the Intergovernmental Agreement. The geographic and jurisdictional reach of this Act is national, applying to all States and the Australian Capital Territory. The Act extends its application through subordinate instruments such as legislative instruments, which are registered on the Federal Register of Legislative Instruments.

Key Provisions

The Federal Financial Relations Act 2009, as referenced in the Explanatory Statement, primarily governs the distribution of financial assistance from the Commonwealth to the States. Section 9(1) of the Act mandates the Minister to credit amounts to the COAG Reform Fund for providing general purpose financial assistance to the States, excluding GST revenue grants. This assistance is intended to support the States' service delivery efforts in various sectors, offering flexibility in how the funds are utilised. The Act specifies that the COAG Reform Fund is established under the COAG Reform Fund Act 2008 and functions as a Special Account under the Financial Management and Accountability Act 1997. The Act imposes several obligations on the Minister and the States concerning the distribution and utilisation of general purpose financial assistance. The Minister must ensure that payments are made in accordance with the terms set out in the Intergovernmental Agreement on Federal Financial Relations. The States, on the other hand, must utilise the funds for their general service delivery efforts, adhering to any conditions attached to the assistance. Additionally, to enhance transparency, the Minister's determinations regarding general purpose financial assistance are registered as legislative instruments on the Federal Register of Legislative Instruments. This requirement ensures that the process is transparent and publicly accessible, although these determinations are exempt from disallowance under the Legislative Instruments Act 2003, facilitating the Minister's ability to meet their obligations. In terms of potential breaches and consequences, the Act does not explicitly detail offences or penalties within the provided excerpt. However, it is implied that any failure to comply with the obligations under the Intergovernmental Agreement or the Act could lead to legal repercussions. While specific penalties are not mentioned, breaches might result in civil or criminal consequences, potentially including legal action to enforce compliance or recover misused funds. The maximum penalties, if applicable, would depend on the nature and severity of the breach, as determined under relevant Australian laws governing financial administration and intergovernmental agreements.