Federal Financial Relations (General Purpose Financial Assistance) Determination No. 82 (January 2016)

Overview

The Federal Financial Relations Act 2009 was enacted to formalise the new framework for federal financial relations agreed under the Intergovernmental Agreement on Federal Financial Relations, which commenced on 1 January 2009. This Act was introduced by the Commonwealth Parliament to provide for the ongoing financial support for the States' service delivery efforts through various forms of assistance, including general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. The policy objective of this Act is to facilitate economic and social reforms in areas of national importance, while enhancing transparency and accountability in the allocation of financial assistance to the States. The Federal Financial Relations Act 2009 ensures that the Minister for Financial Services and Superannuation can credit amounts to the COAG Reform Fund for providing general purpose financial assistance to the States. These assistance payments, which are not subject to disallowance, aim to support the States in their service delivery efforts and are in line with the broader objectives of the IGA. The Act also outlines the consultation process undertaken with the States during the development of the IGA and the ongoing consultation on general revenue assistance arrangements.

Scope and Application

The Federal Financial Relations Act 2009 applies to the Commonwealth, the States, and the Australian Capital Territory, providing the legislative framework for the implementation of the intergovernmental agreements on federal financial relations. This Act facilitates the provision of various forms of financial assistance by the Commonwealth to the States, including general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. The Act allows the Minister for Financial Services and Superannuation to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance, ensuring that these payments are made in a prescribed manner and in line with the obligations under the Intergovernmental Agreement on Federal Financial Relations (IGA). The Act also clarifies that the Minister's determinations regarding general purpose financial assistance are legislative instruments and will be registered on the Federal Register of Legislative Instruments, though they are exempt from disallowance provisions to ensure timely and effective implementation of the IGA. The Act’s scope extends nationally, covering all states and territories within Australia, and it commenced on 1 January 2009, in alignment with the new federal financial framework.

Key Provisions

The Federal Financial Relations Act 2009 (the Act) outlines the provisions for the distribution of financial assistance from the Commonwealth to the States, including general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. Section 9(1) provides that the Minister is required to credit amounts to the COAG Reform Fund for the purpose of providing general purpose financial assistance to the States. This assistance is intended to support the States' service delivery efforts and can be used for any purpose by the States. The Act clarifies that the Minister's determinations regarding these payments are legislative instruments and are registered on the Federal Register of Legislative Instruments, although they are not subject to disallowance (section 9(2)). This exemption from disallowance ensures that the Minister can fulfil the obligation under the Intergovernmental Agreement on Federal Financial Relations (IGA) to make these payments in a prescribed manner. The Act imposes specific obligations on the Minister to make payments of general purpose financial assistance in accordance with the IGA. These obligations are detailed in the IGA, which was developed through extensive consultation with the States and signed by all jurisdictions in December 2008. The IGA is publicly available, and ongoing consultation with the States ensures that the arrangements for general revenue assistance are transparent and cooperative. The Minister's role is to credit the specified amounts to the COAG Reform Fund and to make these payments to the States as required. This process is designed to facilitate the ongoing financial support for the States' service delivery efforts. Under the Act, there are no specific offences or penalties outlined for breaches of the requirements to provide general purpose financial assistance. However, the failure to comply with the obligations set out in the IGA could have broader implications for federal-state relations. The IGA is a binding agreement, and non-compliance could potentially lead to disputes or other consequences under the broader framework of federal financial relations. The Act does not detail specific civil or criminal penalties for breaches, but the importance of adhering to the IGA is underscored by the extensive consultation and agreement process that underpins it. The Act also includes a Statement of Compatibility with Human Rights, prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. The Statement acknowledges that it is difficult to assess the human rights compatibility of the determination or the making of General purpose financial assistance payments, given that these payments can be used for any purpose by the States. However, it is generally accepted that such payments support service delivery and thus promote multiple human rights. Therefore, neither the determination nor the payments could be said to have a detrimental impact on any human rights. The Act's provisions are designed to support the States in their efforts to deliver services, which in turn supports the broader human rights framework by enabling improved service provision.