Overview

The Federal Financial Relations Act 2009 was enacted to provide a robust framework for collaboration between the Commonwealth and the States and Territories in policy development and service delivery. This Act, introduced by the Australian Parliament, aims to facilitate the implementation of economic and social reforms in areas of national importance through various financial assistance mechanisms. The Act established the provision of general purpose financial assistance, including ongoing GST payments, National Specific Purpose Payments, and National Partnership payments to support specific outputs, reforms, or reward jurisdictions delivering nationally significant reforms. The Act was made to align with the Intergovernmental Agreement on Federal Financial Relations, which commenced on 1 January 2009, and it outlines the payment provisions in Section 16 of the Act. The Explanatory Statement issued by the Treasurer for the Federal Financial Relations (General Purpose Financial Assistance) Determination No. 88 (July 2016) further clarifies the legislative process and the role of the COAG Reform Fund in providing general revenue assistance to the States. This determination, which is not subject to disallowance, ensures that the Minister can meet the obligation under the IGA to make payments of general purpose financial assistance in a prescribed manner. Extensive consultation with the States and the public availability of the IGA on the Council for Federal Financial Relations website underscore the commitment to transparency and ongoing dialogue in the financial relations framework.

Scope and Application

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 88 applies to the provision of general purpose financial assistance under the Federal Financial Relations Act 2009, specifically for the on-going financial support provided to the States and Territories through the COAG Reform Fund. This assistance is intended for any purpose as agreed under the Intergovernmental Agreement on Federal Financial Relations (IGA). The Act applies to the Commonwealth government and the various states and territories within Australia, facilitating a coordinated approach to economic and social reforms in areas of national importance. The determination clarifies that the Minister’s decisions regarding general purpose financial assistance are legislative instruments and will be registered on the Federal Register of Legislation, though they are exempt from disallowance provisions to ensure compliance with the IGA. The payments are made in accordance with the prescribed manner outlined in the IGA, which was subject to extensive consultation with the States and approved by the Council of Australian Governments on 29 November 2008.

Key Provisions

The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 88, made under section 9(1) of the Federal Financial Relations Act 2009 (FFR Act), outlines the provisions for the provision of general purpose financial assistance to the States. This assistance is to be used for any purpose by the States, with the amounts credited to the COAG Reform Fund (sections 16 and 9(1)). These determinations, which are legislative instruments, will be registered on the Federal Register of Legislation and are not subject to disallowance (sections 5 of the Legislative Instruments Act 2003 and subsection 9(2) of the FFR Act). This exemption from disallowance ensures that the Minister can fulfill 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, requiring them to credit the COAG Reform Fund with the necessary amounts for general purpose financial assistance. The Minister must also ensure that these payments are made in accordance with the IGA, facilitating ongoing collaboration and policy development between the Commonwealth and the States (section 9(1) of the FFR Act). Furthermore, the Minister must ensure that the determinations are made transparently and are subject to consultation with the States, aligning with the extensive consultation process that was part of the agreement and ongoing arrangements (IGA, COAG Reform Fund Act 2008). Breaches of the provisions outlined in the Act can lead to significant consequences. Although the Act does not explicitly outline specific offences or penalties for non-compliance with the general purpose financial assistance provisions, the failure to meet the obligations under the IGA could result in legal challenges or disputes between the Commonwealth and the States. Additionally, non-compliance with legislative instrument requirements, such as the proper registration of determinations, could lead to administrative penalties under the Legislative Instruments Act 2003. The Act's focus on transparency and consultation aims to mitigate such risks by ensuring that all actions are well-documented and aligned with the agreed framework.