EXPLANATORY STATEMENT
Federal Financial Relations ACt
Federal Financial Relations (General Purpose Financial Assistance) Determination No. 61 (April 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. 6, enacted in April 2014, serves to implement provisions of the intergovernmental agreement on federal financial relations, specifically the general purpose financial assistance component. This legislation aims to facilitate the on-going financial support for the states’ service delivery efforts through the provision of general revenue assistance, ensuring that states can utilise these funds for any purpose. The Federal Financial Relations Act 2009, enacted by the Commonwealth Parliament, outlines the framework for these financial arrangements. The primary objective of this determination is to enhance transparency and ensure that the Minister can effectively meet the obligations of the intergovernmental agreement by exempting the Minister's determinations from disallowance provisions, thereby allowing for the smooth execution of financial support to the states.
Scope and Application
The Federal Financial Relations Act 2009, as supplemented by the Federal Financial Relations (General Purpose Financial Assistance) Determination No. 61, applies to the provision of financial assistance by the Commonwealth to the states in Australia. This Act is integral to the implementation of the Intergovernmental Agreement on Federal Financial Relations, which seeks to enhance policy development and service delivery through financial support. The Act encompasses the ongoing financial assistance provided to states in the form of general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. These payments are intended to support the states in their service delivery efforts across key sectors and to facilitate reforms of national significance. The Act ensures that the Commonwealth meets its obligations under the Intergovernmental Agreement by providing a legislative framework for these financial arrangements. Notably, the Act does not extend to GST revenue grants, which are separately managed under the COAG Reform Fund Act 2008. The determinations made by the Minister concerning general purpose financial assistance are legislative instruments and are subject to registration on the Federal Register of Legislative Instruments, though they are exempt from disallowance provisions, enabling the Minister to fulfil their obligations under the Intergovernmental Agreement.
Key Provisions
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 61 (April 2014) provides the legislative framework for the ongoing financial support for states' service delivery efforts through general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. This determination implements the payment provisions of the Intergovernmental Agreement on Federal Financial Relations (IGA) through the Federal Financial Relations Act 2009. The determination outlines the method by which the Minister credits 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 (section 9). 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.
The obligations and requirements imposed by this determination on the parties or entities it governs include the Minister's obligation to make payments of general purpose financial assistance in a prescribed manner, as outlined in the IGA. The Minister has an obligation to credit amounts to the COAG Reform Fund, which is used to provide general purpose financial assistance to the states in the form of general revenue assistance, other than GST revenue grants (section 9). The Minister also has an obligation to ensure that the determinations made in respect of general purpose financial assistance are legislative instruments and will be registered on the Federal Register of Legislative Instruments. However, these determinations will not be disallowable.
There are no specific offences, penalties, or civil/criminal consequences outlined in this determination for breach. However, failure to comply with the obligations and requirements imposed by this determination may result in legal action being taken against the Minister or the relevant party or entity, depending on the nature and severity of the breach. The maximum penalties for offences under the Federal Financial Relations Act 2009 are not specified in this determination. However, the penalties for offences under the Act may include fines, imprisonment, or both, depending on the nature and severity of the offence.