EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Federal Financial Relations Act 2009
Federal Financial Relations (General Purpose Financial Assistance) Determination No. 90 (September 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 Act 2009 was enacted to formalise and improve the financial relationship between the Commonwealth and the states and territories, facilitating coordinated policy development and service delivery. This Act provides for various forms of financial assistance including general purpose financial assistance, National Specific Purpose Payments and National Partnership payments. The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 90, made in September 2016, specifies the process for the Minister to provide general purpose financial assistance to the states. This determination was made in accordance with the Intergovernmental Agreement on Federal Financial Relations, which was extensively consulted upon and agreed by the Council of Australian Governments in November 2008. The objective of the determination is to enhance transparency by ensuring that determinations in respect of general purpose financial assistance are legislative instruments and registered on the Federal Register of Legislation. Importantly, these determinations are exempt from disallowance provisions, allowing the Minister to meet the obligations under the Intergovernmental Agreement to make payments in a prescribed manner.
Scope and Application
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 90, issued under the Federal Financial Relations Act 2009, applies to the ongoing provision of general purpose financial assistance to the States of Australia by the Commonwealth. This financial assistance is to be used by the States for any purpose, with the primary mechanism being the crediting of amounts to the COAG Reform Fund. The Act applies to all States and Territories of Australia and is a legislative instrument established to enhance transparency and accountability in the provision of general revenue assistance. The Minister's determinations regarding these payments are registered on the Federal Register of Legislation and, while not disallowable, are subject to extensive consultation with the States as mandated by the Intergovernmental Agreement on Federal Financial Relations. The Act does not specify any exclusions or thresholds, but rather provides a framework through which the Commonwealth can facilitate ongoing financial support to the States. The determination came into effect on the day it was made.
Key Provisions
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 90 outlines the framework for general purpose financial assistance provided by the Commonwealth to the States. The main operative sections of this determination pertain to the provision and administration of general revenue assistance. Section 9(1) of the Federal Financial Relations Act 2009 mandates that the Minister must credit amounts to the COAG Reform Fund to facilitate these payments. This funding is intended to be used by the States for any purpose, thereby providing them with flexibility in how they allocate resources to meet their needs.
Under this Act, the obligations of the Commonwealth are primarily centred around the timely and appropriate allocation of funds to the States. The Minister is required to ensure that the general purpose financial assistance is disbursed in accordance with the terms set out in the Intergovernmental Agreement on Federal Financial Relations (IGA). This includes maintaining a level of transparency and consultation with the States, ensuring that the payments are made in a prescribed manner as agreed upon by the Council of Australian Governments (COAG).
The Act imposes specific requirements on the parties involved, particularly the Commonwealth. The Minister must credit the COAG Reform Fund with the necessary amounts for general purpose financial assistance, ensuring that these funds are available for distribution to the States. Additionally, the Minister must ensure that these determinations are registered on the Federal Register of Legislation. The States, in turn, are expected to use the financial assistance in accordance with the terms of the IGA, which includes maintaining open lines of communication with the Commonwealth.
There are no specific offences outlined in the determination; however, any breaches of the IGA or the failure to meet the obligations set out in the determination could lead to civil or administrative consequences. While the determination itself does not specify penalties, breaches of related legislation or agreements could result in legal action or other measures to enforce compliance. The overarching aim is to ensure that the financial assistance provided supports the collaborative efforts between the Commonwealth and the States in delivering services and implementing reforms.