EXPLANATORY STATEMENT
Federal Financial Relations ACt
Federal Financial Relations (General Purpose Financial Assistance) Determination No. 52 (July 2013)
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. 52, made in 2013 under the Federal Financial Relations Act 2009, addresses the need for ongoing financial support for the states' service delivery efforts. This legislation was enacted by the Commonwealth Minister to provide clarity and transparency in the administration of general purpose financial assistance to the states, which is not limited to GST revenue grants. The determination aims to improve the transparency of financial assistance by making the Minister’s determinations legislative instruments, which will be registered on the Federal Register of Legislative Instruments. Notably, these determinations are exempt from disallowance, allowing the Minister to fulfill the obligations under the Intergovernmental Agreement on Federal Financial Relations. The policy objective is to ensure ongoing collaboration and support for the states in their service delivery efforts through various forms of financial assistance.
Scope and Application
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 52, made under the Federal Financial Relations Act 2009, applies to the provision of general purpose financial assistance to the States, ensuring a consistent approach to the on-going financial support for the States' service delivery efforts. This assistance is intended for any purpose as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA) and is part of the broader commitment to facilitate economic and social reforms in areas of national importance. The Act applies to the Commonwealth Government, specifically the Minister responsible for federal financial relations, and the States and Territories who are the recipients of the financial assistance. The geographic reach of this legislation is national, encompassing all states and territories within Australia. Exclusions from this determination are not explicitly stated, but it is understood that the assistance provided is general purpose, thus not targeted for specific purposes unless otherwise specified by other provisions within the IGA or related agreements. The application of this Act can be extended or further defined through subordinate instruments, which would provide additional detail on the implementation and administration of the financial assistance.
Key Provisions
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 52, which was made under the Federal Financial Relations Act 2009, outlines the key provisions for the ongoing provision of general purpose financial assistance to the States. Section 9(1) of the Act empowers the Minister to credit amounts to the COAG Reform Fund for this purpose. This fund, established by the COAG Reform Fund Act 2008, is a Special Account under the Financial Management and Accountability Act 1997, ensuring that the financial assistance provided is managed with a high degree of accountability and transparency.
The obligations under this Determination are primarily centered on the Minister's duty to make payments in a prescribed manner as stipulated in the Intergovernmental Agreement on Federal Financial Relations (IGA). By ensuring that the Minister’s determinations regarding general purpose financial assistance are legislative instruments and registered on the Federal Register of Legislative Instruments, the Act seeks to maintain transparency and clarity in the financial assistance process. It is important to note that these determinations are not subject to disallowance, which allows the Minister to comply with the Intergovernmental Agreement's requirements without hindrance.
Offences and penalties are not explicitly detailed within the text of the Determination itself, but the importance of adhering to the prescribed payment methods cannot be understated. Breaches of the obligations imposed by the IGA could potentially lead to legal ramifications or disputes between the Commonwealth and the States. Although specific penalties are not outlined in the text, the integrity of the federal financial relations framework depends on the faithful implementation of these provisions. Therefore, any failure to comply with the obligations under the IGA could have significant legal and financial consequences for the parties involved.