Federal Financial Relations (General purpose financial assistance) Determination No. 56 (November 2013)

Overview

The Federal Financial Relations Act 2009 was enacted to formalise and implement the intergovernmental agreement on federal financial relations, thereby establishing a robust framework for the provision of financial assistance to the states by the Commonwealth. This Act was introduced to address the need for a clear and structured mechanism for distributing funds and support between the federal government and the states, ensuring that the financial assistance provided is aligned with the broader objectives of economic and social reforms. The Act facilitates the provision of general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA). The Commonwealth Parliament enacted this legislation to enhance the transparency and accountability of financial arrangements between the federal government and the states, with a focus on improving policy development and service delivery in key areas. The policy objective of the Federal Financial Relations Act 2009, as stated in the explanatory statement, is to provide ongoing financial support to states for their service delivery efforts, ensuring that the assistance provided is used effectively to achieve nationally significant reforms and improve outcomes in critical sectors. This Act ensures that the financial assistance provided under the IGA is transparent and subject to legislative oversight, while also allowing for the flexibility required to meet the dynamic needs of the states. The determinations made by the Minister under this Act are legislative instruments that will be registered on the Federal Register of Legislative Instruments but are exempt from disallowance to allow for the timely provision of financial assistance as required by the IGA.

Scope and Application

The Federal Financial Relations Act 2009, as implemented through the Federal Financial Relations (General Purpose Financial Assistance) Determination No. 56, outlines the framework for providing general purpose financial assistance to the states by the Commonwealth. This Act applies to the states and territories of Australia, as it is designed to support their service delivery efforts in accordance with the Intergovernmental Agreement on Federal Financial Relations (IGA). The IGA, which serves as the foundation for this collaboration, was extensively consulted upon and signed by all jurisdictions, thus ensuring a broad consensus on the financial assistance framework. The Act's provisions ensure ongoing support through general purpose financial assistance, including GST payments, which states can use for any purpose, thereby enhancing their capacity to deliver public services. The Act also facilitates payments through the COAG Reform Fund, which is a Special Account established under the COAG Reform Fund Act 2008 and governed by the Financial Management and Accountability Act 1997. Importantly, determinations made by the Minister under this Act are legislative instruments and are subject to registration on the Federal Register of Legislative Instruments, although they are exempt from disallowance provisions to ensure the Minister can meet their obligations under the IGA.

Key Provisions

The main sections of the Federal Financial Relations (General Purpose Financial Assistance) Determination No. 56 establish the framework through which the Commonwealth provides financial assistance to the states. Specifically, Section 9(1) of the Federal Financial Relations Act 2009 allows the Minister to credit amounts to the COAG Reform Fund for general purpose financial assistance to the states. This assistance is intended to be used by the states for any purpose, as per Section 9(2) of the Act. The legislation also outlines the process for making these determinations, which are registered on the Federal Register of Legislative Instruments and are subject to transparency requirements (Section 9(3)). The obligations imposed on the parties by this legislation primarily concern the Commonwealth's commitment to provide ongoing financial support to the states. The Commonwealth must ensure that payments of general purpose financial assistance are made in a prescribed manner, as stipulated by the Intergovernmental Agreement on Federal Financial Relations (IGA). This commitment is further supported by the Minister's obligation to make determinations regarding these payments, which must comply with the requirements set out in the IGA (Section 9(1)). Additionally, the legislation requires ongoing consultation with the states to ensure that the financial assistance arrangements are aligned with national priorities and state needs (Section 9(4)). There are no specific offences or penalties outlined in this Determination for breaches of its provisions. However, the determination does clarify that the Minister's determinations in respect of general purpose financial assistance are legislative instruments and will not be disallowable (Section 9(1)). This means that while the determinations are subject to transparency and registration requirements, they do not fall under the disallowance provisions that apply to other legislative instruments. The focus is on ensuring that the financial assistance is provided in a transparent and accountable manner, rather than on imposing penalties for non-compliance.