Federal Financial Relations (General Purpose Financial Assistance) Determination No. 39 (June 2012)

Overview

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 39, enacted in June 2012, is an instrumental part of the Federal Financial Relations Act 2009. This legislative instrument was introduced to address the need for a robust and transparent framework for the distribution of general purpose financial assistance to the States. The determination aims to ensure that the ongoing financial support provided to the States, as agreed under the Intergovernmental Agreement on Federal Financial Relations (IGA), is administered in a manner that is clear and accountable. The enactment of this legislation by the Parliament of Australia is intended to facilitate the provision of general revenue assistance to the States, separate from GST revenue grants, and to credit amounts to the COAG Reform Fund for this purpose. The policy objective is to enhance transparency and to ensure that the financial assistance provided to the States meets the obligations set out in the IGA, while also allowing for the flexibility required in the implementation of this assistance.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 39, made under the Federal Financial Relations Act 2009, applies to the provision of general purpose financial assistance by the Commonwealth to the States. The act serves to facilitate the ongoing financial support for the States' service delivery efforts, as agreed in the Intergovernmental Agreement on Federal Financial Relations (IGA). This assistance is intended to be used by the States for any purpose and is intended to improve transparency and collaboration in federal financial relations. The determination applies to the Minister who is responsible for crediting amounts to the COAG Reform Fund, which is established under the COAG Reform Fund Act 2008 as a Special Account for the purposes of the Financial Management and Accountability Act 1997. This legislation clarifies 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, but they are not subject to disallowance, allowing the Minister to meet the obligation of making payments of general purpose financial assistance in a prescribed manner. The IGA, which is the foundation of this determination, was subject to extensive consultation with all the States and Territories and was signed by all jurisdictions in December 2008. The IGA is publicly available and there is ongoing consultation with the States on general revenue assistance arrangements. The determination commenced on the day it was made, and its provisions are applicable to the ongoing financial support for the States' service delivery efforts as agreed in the IGA. The act extends its application through subordinate instruments to provide further detail on the implementation of the IGA and the provision of general purpose financial assistance to the States.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 39 (June 2012) under the Federal Financial Relations Act 2009 lays out the framework for the ongoing financial support provided by the Commonwealth to the states through various forms of financial assistance. Specifically, section 9(1) of the Act mandates that the Minister credits amounts to the COAG Reform Fund, which is established under the COAG Reform Fund Act 2008, for the provision of general purpose financial assistance to the states. This assistance is intended to be used for any purpose by the states, distinct from GST revenue grants. The obligations under this Act require the Minister to ensure that these financial assistance payments are made in a prescribed manner, consistent with the obligations outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA). This agreement, which was the result of extensive consultation with the states and signed by all jurisdictions in December 2008, is publicly available on the Ministerial Council for Federal Financial Relations website. The Act also stipulates that the Minister’s determinations regarding general purpose financial assistance are legislative instruments and must be registered on the Federal Register of Legislative Instruments. Importantly, these determinations are exempt from the disallowance provisions, ensuring that the Minister can meet the obligations set forth in the IGA without hindrance. In terms of compliance, the Act does not explicitly outline specific obligations for the states or entities beyond the requirement that they use the assistance as intended. However, the overarching framework and the nature of the IGA imply that states must adhere to the purposes and conditions set by the Commonwealth for the receipt and utilisation of the financial assistance. Failure to comply with the terms of the IGA or the conditions set by the Commonwealth for the financial assistance could potentially lead to disputes or other consequences as outlined in the agreement. Regarding penalties and consequences for breaches, the Act itself does not specify particular offences or penalties for non-compliance with the financial assistance provisions. However, the broader IGA and the nature of intergovernmental agreements in Australia suggest that significant breaches could result in disputes, mediation, or arbitration under the terms of the IGA. Additionally, any failure to comply with the terms of the financial assistance could lead to the withholding of further payments or other remedial actions as agreed upon by the parties involved.