EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Federal Financial Relations Act 2009
Federal Financial Relations (General Purpose Financial Assistance) Determination No. 86 (May 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. 86, made under the Federal Financial Relations Act 2009, was enacted in May 2016 by the Minister for Finance, as mandated by the Intergovernmental Agreement on Federal Financial Relations. This legislation was introduced to establish a new framework for federal financial relations between the Commonwealth and the States and Territories, ensuring a robust collaboration on policy development and service delivery. The primary objective of this Act is to provide ongoing financial support to the States through general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments, thereby facilitating economic and social reforms in areas of national importance. The Act seeks to improve transparency and accountability by requiring the Minister's determinations to be registered on the Federal Register of Legislation, while exempting them from disallowance provisions to ensure compliance with the IGA obligations.
Scope and Application
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 86 applies to the financial assistance provided by the Commonwealth to the states and territories under the Federal Financial Relations Act 2009. This assistance is intended to support the states in their service delivery efforts, including the use of funds for any purpose as agreed under the Intergovernmental Agreement on Federal Financial Relations. The determination clarifies that the Minister's decisions regarding general purpose financial assistance are legislative instruments, registered on the Federal Register of Legislation, but are exempt from disallowance provisions to ensure that the Commonwealth can meet its obligations under the IGA. The determination applies nationally, covering all states and territories in Australia, and aims to enhance transparency and accountability in the allocation and use of general revenue assistance. There are no specific exclusions or thresholds outlined in the determination, but it is subject to extensive consultation with the states and is designed to support broader economic and social reforms.
Key Provisions
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 86 (May 2016) primarily governs the allocation and use of general purpose financial assistance to the states and territories. This assistance, as outlined in section 16 of the Federal Financial Relations Act 2009 (FFR Act), is to be credited to the COAG Reform Fund and provided by the Minister for the purpose of supporting state service delivery efforts. This assistance is separate from GST revenue grants and can be used by the states for any purpose, as stated in subsection 9(1) of the Act.
In fulfilling the obligations set forth in the Intergovernmental Agreement on Federal Financial Relations (IGA), the Commonwealth is mandated to provide ongoing financial support through various forms of assistance, including general purpose financial assistance. This assistance aims to enhance the capacity of the states to deliver services and support reforms in areas of national importance. The Minister has a statutory obligation under the IGA to ensure these payments are made in a prescribed manner, which is facilitated by exempting these determinations from disallowance provisions under the Legislative Instruments Act 2003.
There are no specific obligations or requirements outlined in the determination that impose additional duties on the states or territories beyond the use of the financial assistance for general service delivery purposes. However, the extensive consultation process with the states, as evidenced by the IGA and the ongoing dialogue on general revenue assistance arrangements, underscores a commitment to transparency and cooperative federalism. The determination itself is a legislative instrument and is subject to registration on the Federal Register of Legislation, ensuring that all payments and related determinations are documented and accessible to the public.
The determination does not specify any offences, penalties, or consequences for breaches of its provisions. The focus of the determination is on the procedural and administrative aspects of financial assistance, rather than on punitive measures. The absence of explicit penalties in the determination suggests that any non-compliance or misuse of the financial assistance would be addressed under the broader legal and policy frameworks governing federal financial relations. However, any breaches of the underlying IGA or other related legislation could result in civil or criminal consequences as prescribed in those respective Acts.