EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Federal Financial Relations Act 2009
Federal Financial Relations (General Purpose Financial Assistance) Determination No. 92 (November 2016)
The Intergovernmental Agreement on Federal Financial Relations (the IGA) provides a foundation for collaboration on policy development and service delivery between the Commonwealth and the States and Territories (the States).
When developing this federal financial relations framework, the Commonwealth committed to the provision of on‑going financial support for the States’ service delivery efforts. This includes general purpose financial assistance, such as Goods and Services Tax (GST) payments, which can be used by the States for any purpose.
The IGA’s payment provisions in respect of general purpose financial assistance (other than GST payments) are implemented through a determination by the Treasurer under section 9 of the Federal Financial Relations Act 2009 (the FFR Act).
General purpose financial assistance
The FFR Act provides for the Minister (which is the Treasurer, under current arrangements) to credit amounts to the COAG Reform Fund for the purpose of providing financial assistance to the States in the form of general purpose financial assistance. Once the amounts are credited to the COAG Reform Fund they are debited from the fund to make the grants to the States.
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.
The Treasurer’s determinations in respect of general purpose financial assistance are legislative instruments and are registered on the Federal Register of Legislation, but are not disallowable. The Commonwealth has an obligation under the IGA to make payments of general purpose financial assistance in a prescribed manner. Exemption from the disallowance provisions of the Legislation Act 2003 allows the Treasurer to ensure that this obligation is met.
Consultation
The IGA was subject to extensive consultation with the States and was agreed by the Council of Australian Governments on 29 November 2008. The IGA is publicly available on the Council for Federal Financial Relations website.
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 payments of general purpose financial assistance, as the amounts paid to each State can be used for any purpose. Generally, payments will promote multiple human rights by supporting service delivery in a range of policy areas, at the discretion of each State. Consequently, neither this determination nor the making of general purpose financial assistance payments more generally could be said to have a detrimental impact on any human right.
Commencement
The determination commenced on the day it was made.
Overview
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 92, issued in November 2016 by the Treasurer, implements provisions of the Intergovernmental Agreement on Federal Financial Relations (IGA) regarding the distribution of general purpose financial assistance to the States and Territories. This determination, falling under section 9 of the Federal Financial Relations Act 2009, addresses the need for ongoing financial support for the States’ service delivery efforts, beyond the Goods and Services Tax (GST) payments. The IGA, which was extensively consulted upon and agreed to by the Council of Australian Governments on 29 November 2008, facilitates collaboration between the Commonwealth and the States in policy development and service delivery. The determination ensures that the Commonwealth fulfills its commitment to providing general purpose financial assistance, which can be utilised by the States for any purpose, as stipulated in the IGA. The determination is a legislative instrument registered on the Federal Register of Legislation, exempt from the disallowance provisions to ensure the Commonwealth's obligation under the IGA is met.
Scope and Application
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 92 applies to the financial assistance provided by the Commonwealth to the States and Territories as per the Intergovernmental Agreement on Federal Financial Relations. This determination, made by the Treasurer under section 9 of the Federal Financial Relations Act 2009, outlines the framework for the provision of general purpose financial assistance, excluding Goods and Services Tax payments, to support the States' service delivery efforts. The financial assistance is credited to the COAG Reform Fund and subsequently debited to make grants to the States. The determination is a legislative instrument registered on the Federal Register of Legislation but is exempt from disallowance to ensure the Commonwealth's obligation under the IGA is met. The scope of this determination is national, extending to all States and Territories within Australia. The determination does not specify exclusions or thresholds but relies on the broader provisions of the IGA and the FFR Act. The Commonwealth’s commitment to the payment of general purpose financial assistance is underpinned by extensive consultation with the States, and the determination supports the collaborative policy development and service delivery between the Commonwealth and the States.
Key Provisions
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 92 outlines the framework for the distribution of general purpose financial assistance by the Commonwealth to the States. The main operative sections include the provision of financial support to the States for their service delivery efforts (section 9 of the Federal Financial Relations Act 2009). This financial assistance is credited to the COAG Reform Fund and subsequently debited to make the grants to the States. The Treasurer is responsible for crediting the necessary amounts to the fund and for the subsequent distribution of these funds to the States. The fund is a Special Account under the Public Governance, Performance and Accountability Act 2013.
The Act imposes several obligations on the parties involved. The Commonwealth is required to make payments of general purpose financial assistance to the States in a prescribed manner, as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA). The Treasurer must credit the COAG Reform Fund with the required amounts and ensure the funds are debited for distribution to the States. The States are entitled to receive the financial assistance for any purpose as determined by the Commonwealth. The Act also exempts the Treasurer’s determinations from disallowance provisions, ensuring the obligation to make these payments is met without hindrance.
There are no explicit offences, penalties, or civil or criminal consequences stated in the Determination for breaches of the general purpose financial assistance provisions. However, failure to comply with the obligations under the IGA or the FFR Act could potentially lead to legal challenges or disputes regarding the fulfilment of the Commonwealth's commitments to the States. The lack of specific penalties in the Determination implies that any legal repercussions would stem from broader legal frameworks or the terms of the IGA itself. The overarching goal is to ensure the smooth operation of federal financial relations and support the States in their service delivery efforts.