Federal Financial Relations (General Purpose Financial Assistance) Determination No. 36 (March 2012)

Overview

The Federal Financial Relations Act 2009 was enacted to implement the intergovernmental agreement on federal financial relations, ensuring the ongoing provision of financial support to states for their service delivery efforts. This Act was introduced to address the need for a robust framework to facilitate policy development and service delivery, and to implement economic and social reforms in areas of national importance. Enacted by the Commonwealth Parliament, the Act aims to provide clarity and transparency in the allocation of general purpose financial assistance to the states. The Minister’s determinations regarding these financial assistance payments are legislative instruments and are registered on the Federal Register of Legislative Instruments, although they are exempt from disallowance provisions to ensure the Minister can meet the obligations under the Intergovernmental Agreement. The Act commenced on 1 January 2009, following the signing of the Intergovernmental Agreement on Federal Financial Relations by all jurisdictions in December 2008.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Minister for Finance and other entities involved in the provision of general purpose financial assistance to the States, particularly through the COAG Reform Fund. This Act facilitates the ongoing financial support for the States' service delivery efforts, ensuring that the Commonwealth meets its commitments under the Intergovernmental Agreement on Federal Financial Relations. The Act's scope encompasses the process by which the Minister credits amounts to the COAG Reform Fund for the distribution of general revenue assistance, which is intended to be used by the States for any purpose, excluding GST revenue grants. This legislative framework, which commenced on 1 January 2009, is designed to enhance transparency and accountability in the allocation of financial assistance by making the Minister's determinations legislative instruments subject to registration on the Federal Register of Legislative Instruments. Notably, these determinations are exempt from disallowance, allowing the Minister to fulfill the obligations set out in the Intergovernmental Agreement. The Act's jurisdictional reach is federal, impacting both the Commonwealth and the States in their collaborative efforts to implement economic and social reforms.

Key Provisions

The Federal Financial Relations Act 2009 (the "Act") implements the Intergovernmental Agreement on Federal Financial Relations (IGA), which sets out the framework for ongoing financial support from the Commonwealth to the States. The Act specifically addresses general purpose financial assistance (Section 9), which includes the provision of GST payments to States for any purpose they choose. These payments are credited to the COAG Reform Fund, established under the COAG Reform Fund Act 2008 and designated as a Special Account under the Financial Management and Accountability Act 1997. The Act also mandates that determinations made by the Minister regarding general purpose financial assistance are legislative instruments and must be registered on the Federal Register of Legislative Instruments (Section 9(1)). Importantly, these determinations are exempt from disallowance provisions, ensuring that the Minister can meet the obligations set forth in the IGA without such administrative barriers. Under the Act, the Minister has a duty to credit the COAG Reform Fund with amounts intended for general purpose financial assistance, thereby facilitating the ongoing financial support structure agreed upon in the IGA. This process requires adherence to the prescribed manner of making payments as stipulated in the IGA. The exemption from disallowance ensures that the Minister's actions in crediting funds to the COAG Reform Fund and making financial assistance determinations are not subject to disallowance, thereby maintaining the flexibility required to meet the Commonwealth's obligations under the IGA. The Act thus provides a clear and transparent mechanism for the distribution of financial assistance to the States. The obligations imposed by the Act on the Commonwealth and the States are primarily centred on the timely and accurate provision and receipt of financial assistance. The Commonwealth must credit the COAG Reform Fund with the agreed amounts and make determinations in accordance with the IGA, while the States must use the financial assistance for the purposes outlined in the IGA. The Act also imposes an obligation on the Minister to ensure that determinations related to general purpose financial assistance are made in a transparent manner, with such determinations being legislative instruments that are registered on the Federal Register of Legislative Instruments. There are no specific offences, penalties, or civil/criminal consequences outlined in the Act for breaches of its provisions. However, the failure to comply with the IGA's requirements could lead to broader intergovernmental tensions and potential legal challenges, given that the IGA is a binding agreement between the Commonwealth and the States. The Act's primary focus is on ensuring that the financial assistance is provided in a transparent and accountable manner, without specifying punitive measures for non-compliance. The Act thus provides a framework for ongoing financial relations between the Commonwealth and the States, emphasising transparency, accountability, and adherence to the IGA's stipulations.