EXPLANATORY STATEMENT
Federal Financial Relations ACt
Federal Financial Relations (General Purpose Financial Assistance) Determination No. 40 (July 2012)
The Intergovernmental Agreement on Federal Financial Relations (the IGA) 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 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.
Consultation
The IGA was subject to extensive consultation with the States and was signed by all jurisdictions in December 2008. The IGA is publicly available on the Ministerial Council for Federal Financial Relations website. There is also extensive ongoing consultation with the States on general revenue assistance arrangements.
Commencement
The determination commences on the day it was made.
Overview
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 40, made under the Federal Financial Relations Act 2009, was enacted in 2012 to provide a structured framework for the ongoing financial support to the states for their service delivery efforts. This legislation was introduced to address the need for a clear and transparent process in the allocation of general purpose financial assistance, ensuring compliance with the Intergovernmental Agreement on Federal Financial Relations. The determination, which is a legislative instrument, is registered on the Federal Register of Legislative Instruments and outlines the method by which the Minister credits amounts to the COAG Reform Fund for the purpose of providing financial assistance to the states. Notably, these determinations are exempt from disallowance provisions to facilitate the Minister's obligation to make payments in a prescribed manner as stipulated in the Intergovernmental Agreement. The determination was subject to extensive consultation with the states and was signed by all jurisdictions, reflecting a commitment to collaborative governance and transparency in federal financial relations.
Scope and Application
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 40 (July 2012) under the Federal Financial Relations Act 2009 applies to the financial assistance provided by the Commonwealth to the states. This assistance, which includes general revenue assistance other than GST revenue grants, is intended to support the states in their service delivery efforts. The determination specifically outlines how these payments are to be made, crediting amounts to the COAG Reform Fund as established by the COAG Reform Fund Act 2008. This fund is designated as a Special Account for the purposes of the Financial Management and Accountability Act 1997, ensuring transparency and accountability in the financial assistance process. The Minister for Finance has an obligation under the Intergovernmental Agreement to make these payments in a prescribed manner, and the exemption from disallowance provisions allows for the timely fulfilment of this obligation. The application of this determination is nationwide, covering all states within Australia, and it commenced on the day of its making.
Key Provisions
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 40 (2012) outlines the key provisions for the administration of general purpose financial assistance under the Federal Financial Relations Act 2009 (s. 9). This determination, which was made by the Minister, credits amounts to the COAG Reform Fund for the purpose of providing general revenue assistance to the States, excluding GST revenue grants. It is important to note that this fund is established as a Special Account under the COAG Reform Fund Act 2008 (s. 3) and is governed by the Financial Management and Accountability Act 1997.
The obligations imposed by this Act on the parties involved include the Minister's responsibility to make payments of general purpose financial assistance in the prescribed manner, as stipulated under the Intergovernmental Agreement on Federal Financial Relations (IGA). This obligation is further reinforced by the fact that the Minister’s determinations in respect of general purpose financial assistance are legislative instruments that will be registered on the Federal Register of Legislative Instruments. Importantly, these determinations are exempt from the disallowance provisions, allowing the Minister to fulfill their obligations under the IGA without hindrance.
In terms of penalties and consequences, the Act does not explicitly state maximum penalties for breaches. However, failure to comply with the obligations and requirements set out in the determination could potentially lead to legal action or other consequences as determined by the courts. The Act emphasizes transparency and accountability by ensuring that the Minister’s determinations are registered on the Federal Register of Legislative Instruments, thereby promoting a clear and accessible record of financial assistance provisions.