EXPLANATORY STATEMENT
Issued by authority of the Treasurer/Assistant Treasurer/Minister for Financial Services and SuperannuationFederal Financial Relations ACt 2009
Federal Financial Relations (National Partnership payments) Determination
No. 101 (December 2015)
The Intergovernmental Agreement on Federal Financial Relations (the IGA) provides a robust foundation for collaboration on policy development and service delivery, 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 implemented through the Federal Financial Relations Act 2009.
National Partnership payments
The Federal Financial Relations Act 2009 provides for the Minister to credit amounts to the COAG Reform Fund for the purpose of providing financial assistance to the States in the form of National Partnership payments. The COAG Reform Fund Act 2008 established the COAG Reform Fund and specifies that it is a Special Account for the purposes of the Financial Management and Accountability Act 1997.
To improve transparency, the Minister’s determinations in respect of National Partnership payments are legislative instruments and will be registered on the Federal Register of Legislative Instruments, 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 National Partnership payments in a prescribed manner. Exemption from the disallowance provisions allows the Minister to meet this obligation.
Consultation
The IGA was subject to extensive consultation with the States and was signed by all jurisdictions in December 2008. The IGA is publicly available on the Council for Federal Financial Relations website. There is also extensive consultation with the States on National Partnership payments as they are also required to sign relevant National Partnership agreements.
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 National Partnership payments as the amounts paid to each state vary each month, since individual States meet varying milestones and benchmarks under different National Partnership Agreements. However, in general, National Partnership Agreements will promote multiple human rights by facilitating the provision of additional funding to the States to support service delivery in a range of areas. As such, neither this determination nor the making of National Partnership 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 establish a robust framework for federal financial relations in Australia, aiming to facilitate collaboration and the implementation of economic and social reforms across key sectors. This Act addresses the need for a structured approach to financial assistance provided by the Commonwealth to the States, ensuring that support is aligned with nationally significant reforms and service delivery improvements. The Federal Financial Relations Act 2009 was passed by the Parliament of Australia to formalise the intergovernmental agreement on federal financial relations, ensuring clarity and accountability in the distribution of funds. The Act’s policy objective is to enhance transparency and cooperation between the Commonwealth and the States, providing ongoing support through mechanisms such as general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments.
Scope and Application
The Federal Financial Relations Act 2009 establishes the framework for the Commonwealth to provide financial assistance to the States, including National Partnership payments, which are intended to support the delivery of specified outputs, projects, reforms, or to reward jurisdictions that deliver on nationally significant reforms. This Act applies to the Minister for Financial Services and Superannuation, who is responsible for making determinations regarding these payments, which are to be credited to the COAG Reform Fund established under the COAG Reform Fund Act 2008. These determinations, while legislative instruments, are exempt from disallowance to ensure the Minister can meet obligations under the Intergovernmental Agreement on Federal Financial Relations. The Act applies nationally, as it pertains to agreements signed by all jurisdictions, ensuring a consistent approach to federal financial relations across Australia. Exclusions from the Act are limited, as it broadly encompasses the mechanisms for ongoing financial support to the States as agreed under the IGA. The Act's application may be extended or restricted through subordinate instruments, which are subject to consultation with the States and public availability, reflecting the collaborative nature of federal financial relations.
Key Provisions
The Federal Financial Relations Act 2009 (section 9) outlines the authority for the Minister to credit amounts to the COAG Reform Fund for the purpose of providing National Partnership payments. This is a key provision as it establishes the mechanism by which financial assistance is provided to the states. The payments are intended to support specified outputs or projects, facilitate reforms, or reward jurisdictions that deliver on nationally significant reforms. These payments are a crucial part of the federal financial framework which commenced on 1 January 2009.
The Act imposes several obligations on the parties involved. The Minister is required to make National Partnership payments in a prescribed manner, as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA). Additionally, the states must sign relevant National Partnership agreements, which involve extensive consultation and negotiation processes. These agreements are designed to ensure that the payments are targeted towards areas of national importance and are aligned with the broader objectives of the federal financial framework.
Failure to comply with the provisions of the Federal Financial Relations Act 2009 or the relevant National Partnership agreements can result in various consequences. While specific offences and penalties are not detailed within the explanatory statement, it is implied that breaches of these obligations could lead to legal or financial repercussions. The nature of these consequences would likely depend on the specifics of the breach and the terms of the relevant agreements. The Minister's determinations regarding National Partnership payments are legislative instruments and will be registered on the Federal Register of Legislative Instruments, but they will not be disallowable, ensuring that the Minister can continue to meet their obligations under the IGA.
Transparency and accountability are key features of this legislative framework. The Minister’s determinations are legislative instruments and will be registered on the Federal Register of Legislative Instruments, promoting transparency in the allocation of National Partnership payments. The exemption from disallowance provisions ensures that the Minister can effectively meet their obligations under the IGA without undue interference. This framework is designed to facilitate collaboration and effective service delivery across jurisdictions, ultimately supporting the broader objectives of the federal financial relations system.