EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Federal Financial Relations Act 2009
Federal Financial Relations (National Partnership payments) Determination No. 108 (June 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.
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 (National Partnership payments) Determination No. 108 was introduced in 2016 as a legislative instrument to support the implementation of the Intergovernmental Agreement on Federal Financial Relations, which was established to facilitate collaboration on policy development and service delivery between the Commonwealth and the States and Territories. This determination was made to provide clarity and transparency regarding the Minister's authority to credit amounts to the COAG Reform Fund for the purpose of making National Partnership payments. These payments aim to support specified outputs or projects, facilitate reforms, or reward jurisdictions that achieve nationally significant reforms. The determination ensures that the Minister's decisions in this regard are legislative instruments and are registered on the Federal Register of Legislation, while also clarifying that they are exempt from disallowance provisions to allow the Minister to meet the obligations under the IGA. This legislative instrument was enacted by the Parliament and aims to provide ongoing financial support to the States for service delivery efforts in key areas.
Scope and Application
The Federal Financial Relations (National Partnership payments) Determination No. 108 applies to the allocation of National Partnership payments from the Commonwealth to the states and territories, as specified under the Federal Financial Relations Act 2009. This determination is designed to facilitate the implementation of economic and social reforms in areas of national importance as outlined in the Intergovernmental Agreement on Federal Financial Relations. The payments are intended to support the delivery of specified outputs or projects, to facilitate reforms, or to reward jurisdictions that deliver on nationally significant reforms. The determination clarifies that the Minister’s determinations regarding these payments are legislative instruments and are registered on the Federal Register of Legislation. Notably, these determinations are exempt from disallowance to ensure the Minister can meet the obligations under the IGA. The scope of the Act applies nationally across Australia, encompassing all states and territories that are parties to the IGA. However, the specific amounts and conditions of the payments vary depending on the individual states' achievements under different National Partnerships.
Key Provisions
The main operative sections of the Federal Financial Relations (National Partnership Payments) Determination No. 108 (June 2016) (the Determination) are those that establish the framework for National Partnership payments, which are intended to support the delivery of specified outputs or projects, facilitate reforms, or reward jurisdictions that deliver on nationally significant reforms. Section 9(1) of the Federal Financial Relations Act 2009 (the FFR Act) mandates that the Minister credits amounts to the COAG Reform Fund for this purpose, and this is further detailed in the Determination. These payments are designed to be flexible and responsive to the varying needs and achievements of the States, which is reflected in the varying amounts paid to each state monthly.
The obligations and requirements imposed by the Act on the parties and entities it governs are primarily centred on the transparency and accountability of National Partnership payments. The Determination clarifies that these payments, while legislative instruments, are exempt from disallowance, ensuring that the Minister can fulfil the obligation to make such payments as prescribed by the Intergovernmental Agreement on Federal Financial Relations (the IGA). Additionally, the extensive consultation process with the States ensures that the National Partnerships reflect the agreed-upon reforms and service delivery needs, and these agreements must be signed by the relevant parties to be effective.
There are no specific offences, penalties, or civil/criminal consequences detailed in the Determination itself for breaches of the provisions regarding National Partnership payments. However, the FFR Act and associated legislation, such as the Public Governance, Performance and Accountability Act 2013, impose broader obligations on the proper use of public funds and the maintenance of accountability. Any breaches of these broader obligations could result in civil or criminal penalties, although the specific penalties would depend on the nature and severity of the breach and the applicable legislation. The Determination, by ensuring that the payments are made in a prescribed manner and are subject to ongoing consultation and agreement, aims to mitigate the risk of such breaches occurring.