EXPLANATORY STATEMENT
Federal Financial Relations ACt
Federal Financial Relations (General Purpose Financial Assistance) Determination No. 62 (May 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. 62, made under the Federal Financial Relations Act 2009, was introduced to implement the intergovernmental agreement on federal financial relations by ensuring ongoing financial support for the states' service delivery efforts. Enacted in 2014, this legislation aims to provide transparency and facilitate the commitment of the Commonwealth to offer general purpose financial assistance, including GST payments, to states for any purpose. This determination is a legislative instrument registered on the Federal Register of Legislative Instruments, ensuring that it is not subject to disallowance, thereby enabling the Minister to fulfil the obligation to make payments in a prescribed manner as per the Intergovernmental Agreement on Federal Financial Relations. The IGA itself was the product of extensive consultation with the states and is publicly available, reflecting a commitment to transparency and cooperative federalism.
Scope and Application
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 62, 2014, made under the Federal Financial Relations Act 2009, outlines the arrangements for the provision of general purpose financial assistance to the States by the Commonwealth. This determination applies to all Australian states and territories, as it relates to the implementation of the Intergovernmental Agreement on Federal Financial Relations (IGA). The Act facilitates the ongoing provision of financial support to states, including GST payments and general revenue assistance, to be used by the states for any purpose, thereby underpinning the collaborative policy development and service delivery framework agreed upon in the IGA. The determination clarifies that the Minister's decisions regarding general purpose financial assistance are legislative instruments, ensuring transparency and accountability, while also exempting these instruments from disallowance provisions to enable the Minister to fulfil their obligations under the IGA. The determination commenced on the day it was made, underscoring the immediate applicability of these financial arrangements.
Key Provisions
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 62 (F2014L00660) outlines key provisions for the administration and distribution of general purpose financial assistance under the Federal Financial Relations Act 2009. Section 9(1) of the Act empowers the Minister to credit amounts to the COAG Reform Fund for the purpose of providing financial assistance to the States, which can be used for any purpose. This arrangement is intended to support the States' service delivery efforts and is distinct from GST revenue grants.
The obligations imposed by this determination require the Minister to ensure that the general purpose financial assistance is provided in a manner prescribed by the Act. Given the Intergovernmental Agreement on Federal Financial Relations (IGA) requires these payments, the Minister's ability to make these determinations without the risk of disallowance is crucial. This ensures that the States receive the necessary support without administrative delays that could arise from the disallowance process.
Failure to comply with the requirements set out in the Act and the IGA could result in legal repercussions. The Act does not explicitly outline specific offences or penalties for breaches of the general purpose financial assistance provisions. However, any failure to comply with the IGA or the Act could potentially lead to legal actions or disputes between the Commonwealth and the States, which could have significant implications for federal financial relations and service delivery across the nation. The exact nature and extent of any penalties or consequences would depend on the specific circumstances of the breach and the outcomes of any resulting legal proceedings.