Federal Financial Relations (General Purpose Financial Assistance) Determination No. 35 (February 2012)

Overview

The Federal Financial Relations Act 2009 was enacted to implement the intergovernmental agreement on federal financial relations, ensuring a robust framework for collaboration and service delivery across different levels of government. This Act was introduced to address the need for ongoing financial support for states in their service delivery efforts, facilitating economic and social reforms in areas of national importance. Enacted by the Parliament of Australia, the policy objective of this Act is to provide general purpose financial assistance, including GST payments, to the states for any purpose, while also establishing the mechanism for National Specific Purpose Payments and National Partnership payments. These provisions are intended to support key service delivery sectors and to reward jurisdictions that deliver on nationally significant reforms. The Act aims to enhance transparency and accountability by making the Minister's determinations legislative instruments, which are registered on the Federal Register of Legislative Instruments, although they are not subject to disallowance.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Commonwealth Government, which is responsible for the provision of general purpose financial assistance to the States. This financial assistance is provided through the Minister crediting amounts to the COAG Reform Fund. The Act facilitates the implementation of the Intergovernmental Agreement on Federal Financial Relations, which was signed by all Australian jurisdictions and provides a framework for collaboration on policy development and service delivery. The Act’s provisions are designed to ensure transparency and accountability in the allocation of financial assistance. The Act does not apply to GST revenue grants, which are excluded from the scope of general purpose financial assistance. The Act’s application may be extended or restricted through subordinate instruments, which are legislative instruments and are registered on the Federal Register of Legislative Instruments. The Act commenced on 1 January 2009, the same day as the Intergovernmental Agreement. The Federal Financial Relations Act 2009 has a national jurisdictional reach, applying to all Australian States and Territories. The Act provides for the Minister to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States. This assistance is to be used by the States for any purpose, as agreed under the Intergovernmental Agreement on Federal Financial Relations. The Act ensures that the Minister’s determinations in respect of general purpose financial assistance are legislative instruments and are registered on the Federal Register of Legislative Instruments. The Act also clarifies that these determinations are exempt from disallowance provisions, allowing the Minister to meet the obligation to make payments of general purpose financial assistance in a prescribed manner. The Act’s provisions are designed to improve transparency and accountability in the allocation of financial assistance, while also facilitating collaboration on policy development and service delivery across all Australian jurisdictions.

Key Provisions

The Federal Financial Relations Act 2009 primarily deals with the provision of financial assistance to states, as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA) (section 9). The Act implements the new federal financial framework which commenced on 1 January 2009. The Act specifies the Minister's role in crediting amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the states (section 9). This assistance is in the form of general revenue assistance other than GST revenue grants. The COAG Reform Fund Act 2008 established the COAG Reform Fund, which is a Special Account for the purposes of the Financial Management and Accountability Act 1997 (section 9). In fulfilling these obligations, the Minister is required to make determinations in respect of general purpose financial assistance, which are legislative instruments and will be registered on the Federal Register of Legislative Instruments (section 9). These determinations will not be disallowable, clarifying that they would not otherwise be legislative instruments within the meaning of section 5 of the Legislative Instruments Act 2003 (section 9). The Minister has an obligation under the IGA to make payments of general purpose financial assistance in a prescribed manner, and exemption from the disallowance provisions will allow the Minister to meet this obligation (section 9). The Act does not explicitly outline offences, penalties, or consequences for breach within its text. However, the Minister's failure to adhere to the prescribed manner of making payments could potentially lead to legal challenges or disputes between the Commonwealth and the states, as the IGA represents a binding agreement between the parties. The consequences of such breaches would likely be determined through negotiation, mediation, or legal proceedings between the involved parties. The maximum penalties for these potential breaches are not specified within the Federal Financial Relations Act 2009.