Federal Financial Relations (General purpose financial assistance) Determination No. 65 (August 2014)

Overview

The Federal Financial Relations Act 2009 was enacted to facilitate the implementation of the Intergovernmental Agreement on Federal Financial Relations (IGA), which was established to create a robust framework for collaboration between the Commonwealth and the States on policy development and service delivery. The Act was introduced to address the need for ongoing financial support for the States in their service delivery efforts, through mechanisms such as general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. The policy objective outlined in the Explanatory Statement is to enhance transparency and accountability in the provision of general purpose financial assistance by requiring the Minister's determinations to be legislative instruments, registered on the Federal Register of Legislative Instruments, while exempting them from the disallowance provisions to ensure the Commonwealth can meet its obligations under the IGA. The Act commenced on 1 January 2009, following extensive consultation with all States, and is intended to support the implementation of economic and social reforms in areas of national importance.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Commonwealth Minister for Finance, who is responsible for crediting amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States. This assistance is intended for any purpose, as per the Intergovernmental Agreement on Federal Financial Relations (IGA), and excludes GST revenue grants. The Act provides a legislative basis for the implementation of the IGA, which was agreed upon by all jurisdictions in December 2008, and is aimed at facilitating economic and social reforms in areas of national importance through various financial support mechanisms. The Act's application is national in scope, involving all Australian states and territories, and it operates within the framework set by the IGA. The Minister's determinations regarding general purpose financial assistance are legislative instruments and are registered on the Federal Register of Legislative Instruments, although they are exempt from disallowance to ensure the Minister can meet their obligations under the IGA. The Act also clarifies that these determinations are not subject to disallowance under the Legislative Instruments Act 2003.

Key Provisions

The Federal Financial Relations Act 2009 (sections 8 and 9) outlines the mechanisms by which general purpose financial assistance is provided to the States. The Minister is empowered to credit amounts to the COAG Reform Fund to facilitate these payments, which are intended to support the States' service delivery efforts. The Act mandates that these payments are to be made in accordance with the Intergovernmental Agreement on Federal Financial Relations (IGA). Importantly, the Minister’s determinations regarding these payments are considered legislative instruments and must be registered on the Federal Register of Legislative Instruments. However, these determinations are not subject to disallowance, ensuring that the Minister can continue to meet their obligations under the IGA. The obligations imposed on the parties under the Federal Financial Relations Act 2009 are primarily centred around the transparent and efficient provision of financial assistance. The Minister is required to credit the COAG Reform Fund with the necessary funds to provide general purpose financial assistance to the States (section 9). This process must be conducted in a manner that aligns with the terms of the IGA, ensuring that the assistance is used for any purpose by the States as agreed upon. Furthermore, the Act requires ongoing consultation with the States regarding these arrangements, promoting a collaborative approach to federal financial relations. Breaching the provisions of the Federal Financial Relations Act 2009 can lead to various consequences. While the Act itself does not explicitly outline specific criminal or civil penalties for breaches, the consequences of failing to comply with the Intergovernmental Agreement or the obligations set forth in the Act could be significant. For instance, non-compliance could potentially lead to disputes between the Commonwealth and the States, which might be resolved through the courts or other legal mechanisms. Additionally, the failure to make payments as required under the IGA could impact the States' ability to deliver services effectively, thereby affecting public services and welfare. The precise consequences would depend on the nature and severity of the breach, as well as the specific terms of the IGA and any related agreements.