Federal Financial Relations (General purpose financial assistance) Determination No. 78 (September 2015)

Overview

The Federal Financial Relations Act 2009 was enacted to implement the payment provisions of the Intergovernmental Agreement on Federal Financial Relations, which commenced on 1 January 2009. This Act aims to provide a robust foundation for collaboration on policy development and service delivery among the Commonwealth and the States, facilitating the implementation of economic and social reforms in areas of national importance. The Act provides for the provision of ongoing financial support to the States through general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. The explanatory statement indicates that the Act's objective is to improve transparency and ensure compliance with the Intergovernmental Agreement by requiring the Minister's determinations in respect of general purpose financial assistance to be legislative instruments and registered on the Federal Register of Legislative Instruments, while exempting them from disallowance provisions to allow the Minister to meet their obligations under the Agreement. The Federal Financial Relations Act 2009 was enacted by the Parliament of Australia to give effect to the payment provisions of the Intergovernmental Agreement on Federal Financial Relations. The policy objective of the Act is to facilitate collaboration on policy development and service delivery, and to provide ongoing financial support to the States for key service delivery sectors and specified outputs or projects. The Act clarifies the nature of the Minister's determinations in respect of general purpose financial assistance, ensuring they are legislative instruments and registered on the Federal Register of Legislative Instruments, but exempting them from disallowance provisions to allow the Minister to meet their obligations under the Intergovernmental Agreement. The explanatory statement also notes that the Act promotes multiple human rights by facilitating the provision of additional funding to the States, which will support service delivery in a range of areas at the discretion of each State.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Commonwealth Minister for Financial Services and Superannuation in relation to the administration and provision of general purpose financial assistance to the states through the COAG Reform Fund. This Act is designed to operationalise the Intergovernmental Agreement on Federal Financial Relations, which establishes the framework for ongoing financial support to the states for their service delivery efforts, including general revenue assistance, National Specific Purpose Payments, and National Partnership payments. The Act extends to the Commonwealth, and the implementation of its provisions is subject to the terms of the IGA, which was developed through extensive consultation with the states and territories and was signed by all jurisdictions in December 2008. The Act clarifies the nature of the Minister’s determinations concerning general purpose financial assistance as legislative instruments, subject to registration on the Federal Register of Legislative Instruments, but exempt from disallowance to ensure that the Commonwealth can meet its obligations under the IGA. The Act commenced on 1 January 2009, aligning with the start date of the new federal financial framework, and any determinations under the Act take effect from the date they are made.

Key Provisions

The Federal Financial Relations Act 2009 (the Act) is instrumental in implementing the intergovernmental agreement on federal financial relations through various financial assistance mechanisms. Central to the Act is the provision of general purpose financial assistance, which allows the Minister to credit amounts to the COAG Reform Fund for distribution to states (section 9). This assistance, separate from GST revenue grants, is intended to support the states' service delivery efforts broadly. Additionally, the Act mandates that the Minister’s determinations regarding this assistance are legislative instruments and must be registered on the Federal Register of Legislative Instruments (section 9). Notably, these determinations are exempt from disallowance, ensuring that the Minister can meet the obligations set forth in the Intergovernmental Agreement on Federal Financial Relations (IGA). The Act imposes specific obligations on the Minister, including the responsibility to credit the COAG Reform Fund for general purpose financial assistance in accordance with the IGA (section 9). This involves ensuring that payments are made in a prescribed manner, which aligns with the agreement's stipulations. The exemption from disallowance provisions is crucial in this regard, as it allows the Minister to manage these payments effectively without the risk of the determinations being disallowed. Furthermore, the Act emphasizes transparency by requiring that the Minister's determinations are registered on the Federal Register of Legislative Instruments, providing public access to these financial arrangements. Regarding the consequences of non-compliance, the Act does not explicitly detail criminal or civil penalties for breaches of its provisions. However, failure to adhere to the terms of the IGA could have significant political and financial repercussions, given the critical role of the Act in the implementation of federal financial support to states. Such breaches could potentially undermine the collaborative framework established by the IGA, affecting the broader policy and service delivery objectives that the Act aims to support. The Act’s focus on compliance with the IGA highlights the importance of maintaining a robust and transparent financial assistance mechanism to ensure effective intergovernmental relations.