EXPLANATORY STATEMENT
Federal Financial Relations ACt
Federal Financial Relations (General Purpose Financial Assistance) Determination No. 59 (February 2014)
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 jurisdictions that deliver on nationally significant reforms.
The federal financial framework commenced on 1 January 2009. The payment provisions of the IGA 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 IGA 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 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. 59 was introduced in February 2014 under the Federal Financial Relations Act 2009, an Act enacted by the Australian Parliament to formalise the financial relations between the Commonwealth and the States. This legislation was introduced to address the need for a robust and transparent framework for the distribution of general purpose financial assistance to the States, ensuring that payments are made in a prescribed manner as agreed in the Intergovernmental Agreement on Federal Financial Relations (IGA). The policy objective of this Determination is to enhance transparency and facilitate the ongoing financial support for the States' service delivery efforts by clarifying that the Minister's determinations in respect of general purpose financial assistance are legislative instruments, which will be registered on the Federal Register of Legislative Instruments but will not be disallowable. This exemption from disallowance provisions ensures that the Minister can meet the obligations under the IGA to make payments in a prescribed manner.
Scope and Application
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 59, made under the Federal Financial Relations Act 2009, applies to the provision of general purpose financial assistance to the states by the Commonwealth. This assistance is intended to support the states' service delivery efforts and is delivered through the COAG Reform Fund, as established by the COAG Reform Fund Act 2008. The act applies to the Commonwealth Minister who is responsible for making the determinations regarding the financial assistance, and these determinations are legislative instruments that will 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 out in the Intergovernmental Agreement on Federal Financial Relations. The geographic reach of this legislation is national, applying across all states and territories in Australia, with the commencement date being the day the determination was made. There are no specified exclusions or thresholds in this determination, though the scope and application may be further refined through subordinate instruments or subsequent legislative amendments.
Key Provisions
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 59 (F2014L00657) establishes the framework for the ongoing provision of general purpose financial assistance to the states as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA). This assistance includes general revenue assistance, distinct from GST revenue grants, and is credited to the COAG Reform Fund (sections 1, 2). This fund, established under the COAG Reform Fund Act 2008, is designated as a Special Account for the purposes of the Financial Management and Accountability Act 1997. The Minister is mandated to credit amounts to this fund to provide the financial support required by the IGA (section 3).
The obligations under this determination are primarily centred around the provision of general purpose financial assistance to the states. The Minister must make these payments in a manner prescribed by the IGA to ensure that the federal financial framework is upheld (section 4). To enhance transparency and accountability, the Minister’s determinations regarding general purpose financial assistance are classified as legislative instruments and will be registered on the Federal Register of Legislative Instruments. Importantly, these determinations are exempt from the disallowance provisions, enabling the Minister to fulfil the obligations under the IGA without the risk of the determinations being disallowed (sections 5, 6).
Failure to comply with the requirements of this determination can lead to significant legal consequences. While the determination itself does not explicitly outline specific offences, penalties, or consequences for non-compliance, breaches of the IGA or the Federal Financial Relations Act 2009 could result in legal actions under the broader legislative framework. The potential penalties for breaches may vary depending on the specific provisions of the IGA and the Federal Financial Relations Act 2009, but could include civil or criminal sanctions, financial penalties, or other remedies as prescribed by law. The exact nature and extent of these penalties would need to be assessed in the context of any specific breach and the relevant legislative provisions.