Federal Financial Relations (General purpose financial assistance) Determination No. 63 (June 2014)

Overview

The Federal Financial Relations Act 2009 was enacted to implement the payment provisions of the Intergovernmental Agreement on Federal Financial Relations, which seeks to establish a new framework for federal financial relations. This Act was introduced to address the need for ongoing financial support for the states' service delivery efforts, ensuring that the states can adequately perform their functions with adequate resources. The Act 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. This Act was passed by the Australian Parliament, with the policy objective of facilitating economic and social reforms in areas of national importance through collaboration on policy development and service delivery. The Act provides for the Minister to make determinations regarding the provision of general purpose financial assistance, which are legislative instruments and are registered on the Federal Register of Legislative Instruments. These determinations are not subject to disallowance provisions, which allows the Minister to meet their obligations under the Intergovernmental Agreement. The Act also provides for extensive consultation with the States on general revenue assistance arrangements, ensuring that the states are adequately involved in the decision-making process. The Act commenced on the day it was made, providing immediate effect to its provisions.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Minister for Finance and the Commonwealth of Australia, as well as to the States and Territories of Australia. The Act provides for the Minister to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States, which is used to support the States' service delivery efforts. The Act extends to all States and Territories of Australia, with the payments being made in accordance with the Intergovernmental Agreement on Federal Financial Relations. There are no stated exclusions or exemptions under the Act, but the Minister’s determinations in respect of general purpose financial assistance are legislative instruments and are not disallowable. The Act also 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 Act commenced on 1 January 2009, and the payment provisions of the Intergovernmental Agreement are implemented through the Act.

Key Provisions

The Federal Financial Relations Act 2009, particularly in sections 9 and 11, establishes the legal framework for the distribution of general purpose financial assistance to the states. Under section 9, the Minister is tasked with crediting amounts to the COAG Reform Fund for the purpose of providing general revenue assistance to the states, excluding GST revenue grants. This is done to facilitate the on-going financial support for the states’ service delivery efforts as agreed in the Intergovernmental Agreement on Federal Financial Relations (IGA). Section 11 outlines that the Minister's determinations regarding these financial assistance payments are legislative instruments and must be registered on the Federal Register of Legislative Instruments. Importantly, these determinations are exempt from the disallowance provisions, ensuring that the Minister can fulfill their obligations under the IGA without interference from disallowance processes. The Act imposes several obligations on the Commonwealth and the states. Under the IGA, the Commonwealth is obligated to provide financial assistance in a prescribed manner, which includes making payments to the COAG Reform Fund as stipulated by the Minister. This is reinforced by the requirement in section 9 that the Minister's determinations, which specify the amounts and purposes of these payments, are to be made in accordance with the IGA. Additionally, the states must engage in extensive consultation with the Commonwealth as part of the IGA framework. This ongoing consultation ensures that the financial assistance provided is aligned with the needs and priorities of the states, facilitating effective service delivery and policy development. In terms of potential breaches and consequences, while the Act itself does not explicitly state offences or penalties for non-compliance, the failure to adhere to the terms of the IGA could lead to legal disputes or administrative actions. Given the nature of the IGA and the legal framework established by the Federal Financial Relations Act 2009, any significant non-compliance might result in legal challenges or interventions by the Commonwealth or the states. The Act's provisions ensure that the Minister's determinations are transparent and subject to registration, but the consequences of breaching these obligations would likely be pursued through the courts or other legal mechanisms rather than through specified penalties within the Act itself.