Federal Financial Relations (General purpose financial assistance) Determination No. 43 (October 2012)

Overview

The Federal Financial Relations Act 2009 was enacted by the Commonwealth Parliament to implement the Intergovernmental Agreement on Federal Financial Relations, which was signed in December 2008 by all states and territories. This legislative framework was introduced to address the need for a robust system of federal financial relations to facilitate collaboration on policy development and service delivery, and to support economic and social reforms in areas of national importance. The Act provides for the ongoing financial support for the states’ service delivery efforts through various forms of assistance, including general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. These provisions are designed to ensure transparency and accountability in the distribution of funds, with the Minister's determinations in respect of general purpose financial assistance being legislative instruments and registered on the Federal Register of Legislative Instruments. This legislation aims to improve financial relations between the Commonwealth and the states by establishing a clear and consistent framework for the provision of financial assistance.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Minister for Finance who is responsible for providing financial assistance to the states as part of the intergovernmental agreement on federal financial relations. The act provides for the Minister to credit amounts to the COAG Reform Fund to provide general purpose financial assistance in the form of general revenue assistance other than GST revenue grants. This assistance is intended to support the states' service delivery efforts and facilitates the implementation of economic and social reforms in areas of national importance. The Act applies to the Commonwealth of Australia and its states and territories, with payments being made in accordance with the intergovernmental agreement. The act does not apply to GST revenue grants, which are excluded from the general purpose financial assistance. The act extends to subordinate instruments that may provide further detail on the implementation of the intergovernmental agreement. The act clarifies that 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 ensures that the Minister can meet their obligation under the intergovernmental agreement to make payments of general purpose financial assistance in a prescribed manner.

Key Provisions

The Federal Financial Relations Act 2009 (FFR Act) outlines the framework for providing financial assistance from the Commonwealth to the States, as agreed under the Intergovernmental Agreement on Federal Financial Relations (IGA). Section 9(1) of the Act empowers the Minister to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States. This assistance, referred to as general revenue assistance, is intended to support the States' general expenditure and is distinct from GST revenue grants. It is important to note that these determinations by the Minister are legislative instruments and are registered on the Federal Register of Legislative Instruments, but they are exempt from disallowance provisions. This exemption is crucial as it allows the Minister to comply with the obligations under the IGA to make payments in a prescribed manner without the risk of disallowance. Under the Act, the Minister is required to consult extensively with the States regarding the arrangements for general revenue assistance. This consultation is intended to ensure transparency and mutual agreement on the terms and conditions of the financial support provided. The IGA itself was the result of extensive consultation with all jurisdictions and was signed in December 2008, making it publicly available on the Ministerial Council for Federal Financial Relations website. Ongoing consultations are also mandated to keep the arrangements aligned with the needs and policies of the States. The Act stipulates that any determinations made by the Minister under section 9(1) will take effect on the date they are made. This immediate commencement ensures that the financial support is provided without delay, allowing the States to plan and implement their service delivery efforts effectively. The FFR Act thus provides a structured approach to federal financial relations, ensuring that the financial assistance is transparent, well-consulted, and promptly delivered to meet the agreed-upon objectives. Breaching the provisions of the FFR Act can result in both civil and criminal consequences. While specific penalties are not detailed in the explanatory statement, breaches of legislative instruments, such as those registered under the Act, can lead to substantial fines and other legal repercussions. The severity of the penalties can depend on the nature and impact of the breach, with potential outcomes including significant financial penalties and legal action against the responsible parties. These consequences are intended to enforce compliance and uphold the integrity of the federal financial relations framework.