EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Federal Financial Relations Act 2009
Federal Financial Relations (General Purpose Financial Assistance) Determination No. 85 (April 2016)
The Intergovernmental Agreement on Federal Financial Relations (the IGA) provides a robust foundation for collaboration on policy development and service delivery between the Commonwealth and the States and Territories (the States), and facilitates the implementation of economic and social reforms in areas of national importance.
In agreeing the new framework for federal financial relations, the Commonwealth committed to the provision of on‑going financial support for the States’ service delivery efforts through:
• general purpose financial assistance, including the on‑going provision of GST payments, to be used by the States for any purpose;
• National Specific Purpose Payments (National SPPs) to be spent in the key service delivery sectors; and
• National Partnership payments to support the delivery of specified outputs or projects, to facilitate reforms or to reward jurisdictions that deliver on nationally significant reforms.
The federal financial framework commenced on 1 January 2009. The payment provisions of the IGA are provided by Section 16 of the Federal Financial Relations Act 2009 (the FFR Act).
General purpose financial assistance
The FFR 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.
• The COAG Reform Fund Act 2008 established the COAG Reform Fund and specifies that it is a Special Account for the purposes of the Public Governance, Performance and Accountability Act 2013.
To improve transparency, the Minister’s determinations in respect of general purpose financial assistance are legislative instruments and will be registered on the Federal Register of Legislation, but will not be disallowable.
• This 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 Minister has an obligation under the IGA to make payments of general purpose financial assistance in a prescribed manner. Exemption from the disallowance provisions will allow the Minister to meet this obligation.
Consultation
The IGA was subject to extensive consultation with the States and was agreed by COAG on 29 November 2008. The IGA is publicly available on the Council for Federal Financial Relations website. There is also extensive ongoing consultation with the States on general revenue assistance arrangements.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
It is difficult to assess the human rights compatibility of either the determination or the making of general purpose financial assistance payments, as the amounts paid to each state can be used for any purpose. Generally, payments such as these will promote multiple human rights by facilitating the provision of additional funding to the States, which will invariably support service delivery in a range of areas at the discretion of each State. As such, neither this determination nor the making of general purpose financial assistance payments could be said to have a detrimental impact on any human rights.
Commencement
The determination commences on the day it was made.
Overview
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 85, issued in April 2016, stems from the Federal Financial Relations Act 2009. This Act was enacted to formalise and streamline the financial interactions between the Commonwealth government and the states and territories, in line with the Intergovernmental Agreement on Federal Financial Relations. The act was introduced to address the need for a structured and transparent framework for ongoing financial support for states' service delivery efforts, ensuring that the Commonwealth's commitment to providing general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments is met in a prescribed and cooperative manner. The objective of the Act, as stated, is to enhance collaboration and policy development between the Commonwealth and the states, facilitating the implementation of economic and social reforms. The determinations regarding general purpose financial assistance are legislative instruments subject to registration on the Federal Register of Legislation but are exempt from disallowance provisions to allow the Minister to meet the obligations under the IGA.
Scope and Application
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 85, issued under the Federal Financial Relations Act 2009, outlines the parameters for the provision of general purpose financial assistance to the States by the Commonwealth. This assistance is intended to support the States' service delivery efforts and is distinct from GST revenue grants. The determination is a legislative instrument that will be registered on the Federal Register of Legislation and is not subject to disallowance, which ensures the Minister can meet the obligations set out in the Intergovernmental Agreement on Federal Financial Relations. The determination applies to the Commonwealth in its role of providing financial support to the States, and it is designed to enhance transparency in the allocation of funds. It is important to note that the funds distributed under this arrangement can be used by the States for any purpose, which inherently supports a wide range of human rights by enabling the States to allocate resources as they deem necessary for their jurisdictions.
Key Provisions
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 85 (April 2016) under the Federal Financial Relations Act 2009 (FFR Act) outlines the framework for the Commonwealth's provision of general purpose financial assistance to the states. This assistance is to be used by the states for any purpose, as outlined in Section 16 of the FFR Act. The determination requires the Minister to credit amounts to the Council of Australian Governments (COAG) Reform Fund, which is established under the COAG Reform Fund Act 2008 and is a Special Account under the Public Governance, Performance and Accountability Act 2013.
The obligations under this Act primarily rest with the Minister, who must ensure that the payments of general purpose financial assistance are made in a prescribed manner as per the intergovernmental agreement (IGA). The Minister’s determinations in respect of general purpose financial assistance are legislative instruments and will be registered on the Federal Register of Legislation. Importantly, these determinations are exempt from the disallowance provisions, which allows the Minister to fulfill their obligations under the IGA without hindrance. This exemption is crucial to ensure the seamless provision of financial support to the states.
Failure to comply with the provisions of this Act could result in civil or criminal consequences, although the specific nature of these consequences is not detailed in the provided text. Typically, breaches of such legislative instruments can attract penalties, which may include fines or other sanctions depending on the severity and intent behind the breach. The Act emphasizes transparency and accountability, which are fundamental to its implementation and enforcement. The determination itself commences on the day it was made, ensuring immediate effect from the date of publication.
The Act also highlights the extensive consultation process that underpins the intergovernmental agreement, which was subject to broad consultation with the states and agreed by COAG on 29 November 2008. This ongoing consultation ensures that the financial assistance arrangements are aligned with the needs and priorities of the states. Furthermore, the Act mentions that the IGA is publicly available on the Council for Federal Financial Relations website, which enhances transparency and public accountability. The Statement of Compatibility with Human Rights confirms that the determination and the payments themselves do not detrimentally impact any human rights, as they facilitate additional funding for state-level service delivery.