Federal Financial Relations (National Partnership Payments—2025-26 Payment No. 2) Determination 2025

Administered by Department of the Treasury

Legislation au F2025L00894 In force Legislative Instrument

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EXPLANATORY STATEMENT

Issued by authority of the Assistant Minister for Productivity, Competition, Charities and Treasury

Federal Financial Relations Act 2009

Federal Financial Relations (National Partnership Payments—2025-26 Payment No. 2) Determination 2025

Subsection 16(1) of the Federal Financial Relations Act 2009 (the FFR Act) provides that the Minister may determine amounts to be paid to the States, the Australian Capital Territory or the Northern Territory for the purpose of the Commonwealth making grants of financial assistance to:

•                 support the delivery of agreed outputs or projects;

•                 facilitate State and Territory reforms; and

•                 reward States and Territories for nationally significant reforms.

The purpose of the Federal Financial Relations (National Partnership Payments—2025-26 Payment No. 2) Determination 2025 (the Determination) is to determine amounts of financial assistance to be paid to the States, the Australian Capital Territory or the Northern Territory for matters detailed in the dot points above.

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, the Australian Capital Territory and the Northern Territory. As part of the IGA, the Commonwealth has committed to the provision of on-going financial support for the States’ and Territories’ service delivery efforts. This includes the provision of national partnership payments which support the matters detailed in the dot points above.

The Determination gives effect to the Commonwealth’s ongoing obligations under the IGA to make grants of financial assistance.

By way of background, legislative authority is required for the Commonwealth to spend money from the Consolidated Revenue Fund. The Public Governance, Performance and Accountability Act 2013 provides that, if another Act establishes a special account and identifies the purposes of the account, the Consolidated Revenue Fund is appropriated up to the balance of the account at any point in time for expenditure for the purposes of the account.

In this context, the Federation Reform Fund Act 2008 establishes the Federation Reform Fund, a special account, which has the purpose of making grants of financial assistance to States and Territories. The FFR Act requires the Minister, following the making of a determination, to credit funds he or she has determined to the Federation Reform Fund for the purpose of providing financial assistance to the States, the Australian Capital Territory or the Northern Territory.

Under subsection 16(3) of the FFR Act, the total amount credited to the Federation Reform Fund for the purpose of making a grant of national partnership payments in a financial year must not exceed the debit limit determined for that year. The debit limit is set by the annual appropriation Acts. The Determination will not result in total determined amounts for the relevant financial year exceeding the debit limit.

The IGA was subject to extensive consultation with the States and Territories before it was agreed by the former Council of Australian Governments on 29 November 2008. The IGA is publicly available on the Federal Financial Relations website. The Determination is minor and machinery in nature and was not subject to further consultation.

Details of the Determination are set out in Attachment A.

The Determination is a legislative instrument for the purposes of the Legislation Act 2003. In accordance with subsection 16(5) of the FFR Act and subsection 44(1) of the Legislation Act 2001, the Determination is not subject to disallowance. The Determination is also not subject to sunsetting under subsection 54(1) of the Legislation Act 2003. The exemptions from disallowance and sunsetting are provided on the grounds that the instrument is part of an intergovernmental scheme and gives effect to agreements between the Commonwealth and each of the States, the Australian Capital Territory and the Northern Territory. The instrument's operation is effectively mechanical in that it simply details an instalment of financial assistance to be provided to a State or Territory based on that State or Territory having satisfied the necessary agreed criteria. The instrument can only authorise financial assistance being paid to a State or Territory where it has been supported by a valid appropriation enacted by the Parliament, further the annual appropriation Bills also include annual debit limits for amounts that may be spent under the delegated general purpose financial assistance or national partnership payments under the FFR Act. The debit limits provide an effective mechanism to limit the expenditure of public money under the Determination and ensures that there is alternative Parliamentary scrutiny of such arrangements.

The Determination commenced immediately after it was registered on the Federal Register of Legislation.

A statement of Compatibility with Human Rights is at Attachment B.

ATTACHMENT A

Details of the Federal Financial Relations (National Partnership Payments—2025-26 Payment No. 2) Determination 2025

Section 1 – Name of the Determination

This section provides that the name of the Determination is the Federal Financial Relations (National Partnership Payments—2025-26 Payment No. 2) Determination 2025 (the Determination).

Section 2 – Commencement

The Determination commenced immediately after it was registered on the Federal Register of Legislation.

Section 3 – Authority

The Determination is made under the Federal Financial Relations Act 2009 (the Act).

Section 4 – Definitions

This section provides definitions are that used in the Determination.

Section 5 – Determination of national partnership payments

This section specifies amounts to be paid to each of the States, the Australian Capital Territory and the Northern Territory as grants of financial assistance to:

•                 support the delivery of agreed outputs or projects;

•                 facilitate State and Territory reforms; and

•                 reward States and Territories for nationally significant reforms.

Financial assistance provided is based on that State or Territory having satisfied the necessary agreed criteria, and having advised the Commonwealth prior to when the relevant monthly payment falls due.

ATTACHMENT B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011


Federal Financial Relations (National Partnership Payments—2025-26 Payment No. 2) Determination 2025

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The instrument determines amounts of national partnership payments to be paid to the States, the Australian Capital Territory or the Northern Territory.

Human rights implications

This Legislative Instrument does not directly engage any of the applicable rights or freedoms.

National partnership agreements set out mutually agreed objectives, outcomes, outputs and performance requirements for the specific services, project or reform to be delivered under that agreement. Each agreement is negotiated between the Commonwealth and the relevant States and Territories. Through the negotiation process, the States and Territories have input into the setting of benchmarks to be used to measure progress in delivering services, projects and reforms. As such, the benchmarks in national partnership agreements are agreed by all parties as achievable and demonstrating the realisation of the mutually-agreed policy objectives.

The States and Territories meet the overwhelming majority of performance requirements in national partnership agreements. The associated funding is then paid in accordance with determinations made under the FFR Act, such as the Determination, consistent with the terms and conditions of the relevant agreement. The setting of performance requirements promotes the progressive realisation of certain human rights by creating an incentive for the efficient delivery of services, projects and reforms in sectors such as health, education, housing and community services. For example, determinations may include payments that support:

•                 the rights of people with disabilities to full and effective participation and inclusion in society (Article 3, Convention on the Rights of Persons with Disabilities);

•                 the right to education (Article 13, International Covenant on Economic, Social and Cultural Rights; Article 28, Convention of the Rights of the Child; Article 24, Convention on the Rights of Persons with Disabilities);

•                 the right to be physically and mentally healthy (Article 12, International Covenant on Civil and Political Rights);

•                 the right to adequate housing (Article 11, International Covenant on Civil and Political Rights);

•                 realisation of the right to work through vocational training (Article 6, International Covenant on Economic, Social and Cultural Rights; Article 27, Convention on the Rights of Persons with Disabilities); and

•                 the right to an adequate standard of living (Article 11, International Covenant on Civil and Political Rights).

It is difficult to assess the human rights compatibility of the making of payments of financial assistance to each State or Territory as the States and Territories are responsible for the delivery of those services.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

Overview

The Federal Financial Relations (National Partnership Payments—2025-26 Payment No. 2) Determination 2025 was enacted to determine amounts of financial assistance to be paid to the States, Australian Capital Territory, and Northern Territory in support of agreed outputs or projects, facilitating state and territory reforms, and rewarding nationally significant reforms. This legislation, issued by authority of the Assistant Minister for Productivity, Competition, Charities, and Treasury, operates under the Federal Financial Relations Act 2009 (FFR Act). It is designed to give effect to the Commonwealth’s obligations under the Intergovernmental Agreement on Federal Financial Relations, which facilitates collaboration on policy development and service delivery. The Determination ensures that payments are made in accordance with established criteria and agreed benchmarks, thereby promoting efficient service delivery and the progressive realisation of human rights as outlined in various international conventions and covenants. The Determination, being minor and mechanical in nature, is not subject to disallowance or sunsetting and provides a clear framework for financial assistance within the bounds set by annual appropriation Acts and debit limits.

Scope and Application

The Federal Financial Relations (National Partnership Payments—2025-26 Payment No. 2) Determination 2025 applies to the Commonwealth, the States, the Australian Capital Territory, and the Northern Territory. It is established under the Federal Financial Relations Act 2009, which mandates the determination of amounts for national partnership payments to be granted to the States, the Australian Capital Territory, and the Northern Territory. These payments are intended to support the delivery of agreed outputs or projects, facilitate state and territory reforms, and reward states and territories for nationally significant reforms. The geographic reach of this Act is national, involving all jurisdictions within Australia. The Determination is minor and machinery in nature, and it is not subject to disallowance or sunsetting due to its role in implementing an intergovernmental scheme that is agreed upon by the Commonwealth and each of the States, the Australian Capital Territory, and the Northern Territory. The Determination is effective immediately upon its registration on the Federal Register of Legislation. The financial assistance provided is contingent on the states or territories meeting specific criteria and having notified the Commonwealth beforehand. The instrument does not directly engage any of the applicable rights or freedoms as outlined in the relevant international instruments.

Key Provisions

The Federal Financial Relations (National Partnership Payments—2025-26 Payment No. 2) Determination 2025 (the Determination) sets out the amounts of financial assistance to be paid to the States, the Australian Capital Territory, and the Northern Territory under the Federal Financial Relations Act 2009 (FFR Act). Section 5 of the Determination specifies the amounts allocated to each jurisdiction based on their meeting the criteria for support in delivering agreed outputs or projects, facilitating reforms, or achieving nationally significant reforms. This financial assistance is contingent on the respective jurisdictions satisfying the agreed criteria and providing prior notification to the Commonwealth. The Determination imposes obligations on the States, the Australian Capital Territory, and the Northern Territory to ensure they meet the criteria for receiving the financial assistance. These entities must demonstrate that they have fulfilled the conditions set forth in the national partnership agreements, including achieving the agreed outputs, facilitating reforms, and, where applicable, receiving rewards for nationally significant reforms. This process ensures that the financial assistance aligns with the objectives outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA), which serves as the foundation for collaboration between the Commonwealth and the states and territories. Under the FFR Act, failure to comply with the requirements set out in the Determination could potentially lead to legal consequences, although the Determination itself does not explicitly detail specific offences or penalties. However, it is important to note that the FFR Act provides for the Minister to credit funds to the Federation Reform Fund for the purpose of making grants. The annual appropriation Acts, which include the annual debit limits for amounts that may be spent, provide an additional layer of oversight. Breaches of these obligations could potentially be addressed under the general legal frameworks governing public expenditure and the administration of the Federation Reform Fund. It is also worth noting that the Determination is not subject to disallowance or sunsetting, reinforcing its importance in the ongoing scheme of federal financial relations. The Determination ensures that the financial assistance provided to the States, the Australian Capital Territory, and the Northern Territory is in line with the human rights objectives set out in various international agreements, such as the Convention on the Rights of Persons with Disabilities and the International Covenant on Economic, Social and Cultural Rights. By setting performance benchmarks and providing funding based on the achievement of these benchmarks, the Determination supports the progressive realisation of human rights in areas such as education, health, housing, and community services. While the Determination itself does not directly engage with human rights, the financial assistance it details supports the delivery of services that contribute to the realisation of these rights.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.