Federal Financial Relations (General purpose financial assistance) Determination No. 67 (October 2014)

Overview

The Federal Financial Relations Act 2009 was enacted to provide a legislative foundation for the implementation of the intergovernmental agreement on federal financial relations, ensuring the provision of ongoing financial support for the states' service delivery efforts. This Act was developed to address the need for a robust and collaborative framework for policy development and service delivery across Australia, facilitating economic and social reforms in areas of national importance. The enacting body responsible for this legislation is the Commonwealth Parliament, reflecting the commitment of the Commonwealth to enhance federal financial relations through this structured financial support system. The policy objective of the Act is to establish a transparent and effective mechanism for the distribution of general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments, as outlined in the Intergovernmental Agreement on Federal Financial Relations.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Australian government and all states and territories within the Commonwealth. It outlines the framework for financial assistance agreements between the federal government and the states, as stipulated in the Intergovernmental Agreement on Federal Financial Relations. The Act is designed to facilitate ongoing financial support for state service delivery efforts through various forms of financial assistance, including general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. These provisions aim to support key service delivery sectors, specific outputs or projects, and to reward jurisdictions that implement nationally significant reforms. The Act ensures that general purpose financial assistance is credited to the COAG Reform Fund, established under the COAG Reform Fund Act 2008, and specifies that the fund is a Special Account for the purposes of the Financial Management and Accountability Act 1997. Determinations made by the Minister regarding general purpose financial assistance are legislative instruments and are registered on the Federal Register of Legislative Instruments, though they are exempt from disallowance to ensure the Minister can meet obligations under the Intergovernmental Agreement. The Act commenced on 1 January 2009, and the agreement was the result of extensive consultation with all jurisdictions and is publicly available.

Key Provisions

The Federal Financial Relations Act 2009, under sections 9 and 10, governs the provision of general purpose financial assistance to the States. Specifically, section 9 allows the Minister to credit amounts to the COAG Reform Fund for the purpose of providing general revenue assistance other than GST revenue grants to the States. This assistance is intended to be used by the States for any purpose, providing them with the flexibility to allocate funds according to their needs. Section 10 details the process by which these determinations are made, which must be done in a manner consistent with the Intergovernmental Agreement on Federal Financial Relations (IGA). Under the Act, the Minister has a statutory obligation to make payments of general purpose financial assistance in a prescribed manner. This obligation is mandated by the IGA, and the exemption from disallowance provisions (section 10) ensures that the Minister can meet this commitment without the risk of their decisions being overturned by Parliament. Additionally, to enhance transparency, the Minister’s determinations regarding general purpose financial assistance are legislative instruments and must be registered on the Federal Register of Legislative Instruments, although they are not subject to disallowance (section 10). The Act imposes several obligations on the parties involved. The Minister is required to consult extensively with the States, as stipulated by the IGA, and ensure that payments are made in accordance with the prescribed manner. Furthermore, the Act mandates that these determinations are registered on the Federal Register of Legislative Instruments, promoting transparency and accountability in the distribution of financial assistance. The Act does not explicitly outline specific offences or penalties for breaches of its provisions. However, failure to comply with the obligations set forth in the Act, such as not making payments in the prescribed manner, could potentially lead to legal consequences under the broader framework of the IGA or other relevant legislation. The penalties for such breaches would depend on the specific nature of the non-compliance and could involve legal action or administrative penalties as stipulated in related agreements or laws.