EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Federal Financial Relations Act 2009
Federal Financial Relations (General Purpose Financial Assistance) Determination No. 94, January 2017)
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).
Under this framework, the Commonwealth has committed to the provision of ongoing 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 by way of 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 Act 2009 was enacted to facilitate and formalise the financial relationship between the Commonwealth and the States, ensuring a stable and predictable framework for intergovernmental financial transfers. This legislation was introduced to address the need for a structured and transparent process for distributing financial resources to the States to support service delivery and policy initiatives. The determinations made under this Act, such as the Federal Financial Relations (General Purpose Financial Assistance) Determination No. 94 in January 2017, are instrumental in implementing the intergovernmental agreements, including the Intergovernmental Agreement on Federal Financial Relations, which was developed following extensive consultation with the States and agreed upon by the Council of Australian Governments. These determinations, while not disallowable, ensure the Commonwealth meets its obligations under the IGA by providing general purpose financial assistance that can be utilised by the States for various purposes, thereby supporting a wide range of human rights through enhanced service delivery.
Scope and Application
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 94, 2017, issued under the Federal Financial Relations Act 2009, applies to the Commonwealth government and the States of Australia, providing for the distribution of general purpose financial assistance, excluding Goods and Services Tax (GST) payments, to the States. This determination is part of the broader framework established by the Intergovernmental Agreement on Federal Financial Relations (IGA) and is intended to ensure the ongoing financial support for the States’ service delivery efforts. These payments are credited to the COAG Reform Fund and subsequently debited to grant funds to the States. Notably, the determination is not subject to disallowance, allowing the Treasurer to meet the Commonwealth's obligations under the IGA. The determination came into effect on the day it was made and is a legislative instrument registered on the Federal Register of Legislation.
Key Provisions
The Federal Financial Relations (General Purpose Financial Assistance) Determination No. 94, 2017, made under section 9 of the Federal Financial Relations Act 2009 (FFR Act), is an instrument that sets out the payment provisions for general purpose financial assistance to the States, excluding GST payments. This determination, issued by the Treasurer, formalises the Commonwealth's commitment under the Intergovernmental Agreement on Federal Financial Relations (IGA) to provide ongoing financial support to the States for their service delivery efforts. This support can be used by the States for any purpose, thereby offering flexibility in addressing their specific needs and priorities.
In accordance with the determination (sections 1 to 6), the Minister, currently the Treasurer, is required to credit amounts to the Council of Australian Governments (COAG) Reform Fund. These amounts are subsequently debited from the fund to facilitate grants to the States. The COAG Reform Fund Act 2008 established the COAG Reform Fund, which is a Special Account under the Public Governance, Performance and Accountability Act 2013. This legal framework ensures that the financial assistance is managed in a transparent and accountable manner, with the funds being earmarked specifically for the purpose of providing financial support to the States.
The determination also imposes obligations on the parties it governs. The Commonwealth, under the IGA, has a commitment to make payments of general purpose financial assistance in a prescribed manner. The exemption from the disallowance provisions of the Legislation Act 2003 allows the Treasurer to ensure that this obligation is met without the need for parliamentary scrutiny of the determination itself. This streamlined process ensures that the financial assistance is provided in a timely and efficient manner, without unnecessary bureaucratic delays.
Furthermore, the determination outlines the potential consequences for breach, though specific offences, penalties, or civil/criminal consequences are not detailed within the determination itself. However, the overarching legislation, the FFR Act, may provide for penalties or other legal consequences for non-compliance with the terms of the determination. The importance of adhering to the determination and the underlying IGA lies in the maintenance of stable and predictable financial relations between the Commonwealth and the States, which is critical for effective governance and service delivery across Australia.