EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Federal Financial Relations Act 2009
Federal Financial Relations (National Partnership payments) Determination No. 108 (July 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).
National Partnership payments
The FFR Act 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 Public Governance, Performance and Accountability Act 2013.
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 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 National Partnership payments in a prescribed manner. Exemption from the disallowance provisions allows the Minister to meet this obligation.
Administrative error
This determination was titled Federal Financial Relations (National Partnership payments) Determination No. 108 (July 2016). The correct title for the determination should have been Federal Financial Relations (National Partnership payments) Determination No. 109 (July 2016).
The Australian Government Solicitor has advised that the numbering of the determinations is for administrative purposes only and not a requirement under section 16 of the FFR Act. The advice concludes that the incorrect numbering is an administrative error and the instrument would be given effect in accordance with its substantial terms.
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 consultation with the States on National Partnership payments as they are also required to sign relevant National Partnerships.
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 Partnerships. However, in general, National Partnerships 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, enacted by the Australian Parliament, was introduced to provide a structured framework for financial relations between the Commonwealth and the states and territories, facilitating collaboration in policy development and service delivery. This Act, alongside the Intergovernmental Agreement on Federal Financial Relations, ensures ongoing financial support for states through various payment mechanisms such as general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. The objective is to improve transparency and ensure that payments are made in a prescribed manner, enhancing the efficiency of service delivery across key sectors. The explanatory statement for the Federal Financial Relations (National Partnership payments) Determination No. 108, released in July 2016, highlights the administrative error in the numbering of the determination, clarifying that the error does not affect the instrument's validity or intent. This determination aims to provide clarity and proper alignment with the obligations under the IGA, ensuring that the Commonwealth meets its commitment to financial support for states' service delivery efforts.
Scope and Application
The Federal Financial Relations (National Partnership payments) Determination No. 109 (July 2016) applies to the process of providing financial assistance to the states and territories through the mechanism of National Partnership payments. These payments are a part of the broader framework of federal financial relations established under the Intergovernmental Agreement on Federal Financial Relations and the Federal Financial Relations Act 2009. The payments are designed to support specified outputs or projects, facilitate reforms, or reward jurisdictions that deliver on nationally significant reforms. The Minister's determinations in respect of these payments are legislative instruments that are registered on the Federal Register of Legislation, though they are exempt from disallowance provisions to ensure the Minister can meet their obligations under the IGA. This legislative framework applies across Australia, involving the Commonwealth, states, and territories in the collaborative effort to enhance service delivery and policy development. The legislation does not specify exclusions or thresholds but relies on subordinate instruments to detail the particulars of each National Partnership agreement.
Key Provisions
The Federal Financial Relations (National Partnership payments) Determination No. 108 (July 2016) (hereafter referred to as the Determination) outlines the method and conditions under which the Minister for Finance credits amounts to the COAG Reform Fund for National Partnership payments, as stipulated in section 16 of the Federal Financial Relations Act 2009 (FFR Act). These payments are intended to support specified outputs, projects, reforms, or to reward jurisdictions that deliver on nationally significant reforms. The Determination clarifies that these payments are not subject to disallowance provisions, ensuring that the Minister can fulfil the obligation under the Intergovernmental Agreement on Federal Financial Relations (IGA) to make payments in a prescribed manner. The title of the determination was mistakenly numbered as No. 108 instead of No. 109, but this has been deemed an administrative error and does not affect the substance of the determination.
Entities governed by this Determination, primarily the Commonwealth Minister for Finance, are obligated to credit amounts to the COAG Reform Fund in accordance with the terms of the IGA and the FFR Act. The Minister must ensure that these payments are made transparently, as the determinations are legislative instruments and are registered on the Federal Register of Legislation. This ensures that the process is open and accountable to the public. The States, as recipients of these payments, must comply with the conditions and milestones set out in the relevant National Partnerships they have signed, which are also subject to consultation and agreement.
The Determination does not explicitly outline specific offences or penalties for non-compliance with its provisions. However, the failure to make National Partnership payments as per the IGA could lead to legal consequences under the FFR Act. The IGA itself provides a framework for resolving disputes and ensuring compliance through mechanisms such as the Council of Australian Governments (COAG) and its subsidiary bodies. The human rights compatibility statement suggests that neither the determination nor the payments are likely to have a detrimental impact on any human rights, as they aim to support service delivery in various areas, potentially promoting multiple human rights. Nonetheless, any significant breach of the terms of the IGA or the FFR Act could lead to legal and financial repercussions for the parties involved.