Federal Financial Relations (National Partnership Payments) Determination No. 130 (February 2018)

Overview

The Federal Financial Relations (National Partnership payments) Determination No. 130, made in February 2018 under section 16 of the Federal Financial Relations Act 2009, was introduced to address the need for ongoing financial support for states and territories to facilitate reforms and deliver specified outputs or projects, as committed under the Intergovernmental Agreement on Federal Financial Relations. This determination was enacted by the Minister for Treasury, who has the authority to credit amounts to the COAG Reform Fund for National Partnership payments, which are not subject to disallowance. The determination outlines the conditions for payments, including the requirement for independent assessments and performance benchmarks for incentive payments, and scheduled payments for other types of payments. The determination also specifies that the total amount of National Partnership payments in the 2017-18 financial year must not exceed $25 billion. The policy objective of this determination is to support the efficient delivery of services, projects, and reforms in sectors such as health, education, housing, and community services, which in turn promotes the progressive realisation of human rights as set out in various international covenants and conventions. The determination highlights that the States and Territories generally meet the majority of performance requirements in National Partnership agreements, and that funding is paid accordingly. The setting of performance requirements creates an incentive for the efficient delivery of services, projects, and reforms, thereby promoting the realisation of human rights such as the rights of people with disabilities, the right to education, the right to be physically and mentally healthy, the right to adequate housing, and the right to an adequate standard of living. The total amount of National Partnership payments varies over time due to the varying duration of projects and reforms, annual funding allocations, and structural changes in service provision, such as the transition to the National Disability Insurance Scheme. This determination ensures that National Partnership payments are made in a manner that supports the agreed objectives, outcomes, outputs, and performance requirements of the relevant agreements, while also promoting the realisation of human rights.

Scope and Application

The Federal Financial Relations (National Partnership payments) Determination No. 130 (2018) applies to the Commonwealth, the States, and the Territories as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA). The determination regulates the provision of National Partnership payments, which are financial supports to the States for service delivery, reforms, and incentivising nationally significant reforms. The determination is made under section 16 of the Federal Financial Relations Act 2009, and it specifies how these payments are to be made, including the conditions and payment profiles, and it sets a debit limit for the total amount that can be credited to the COAG Reform Fund for such payments in the financial year starting on 1 July 2017. The determination is not subject to disallowance, ensuring that the Commonwealth's obligation under the IGA is met. It is noted that National Partnership agreements, which are negotiated between the Commonwealth and the relevant States and Territories, set out the objectives, outcomes, outputs, and performance requirements, with payments being contingent upon the achievement of pre-determined milestones or performance benchmarks. The determination commenced on the day it was made and includes a statement of compatibility with human rights, recognising that the setting of performance requirements in National Partnership agreements promotes the progressive realisation of human rights in sectors such as health, education, housing, and community services.

Key Provisions

The main sections of the Federal Financial Relations (National Partnership payments) Determination No. 130 (February 2018) pertain to the process and criteria for making National Partnership payments (NPPs) under the Federal Financial Relations Act 2009 (FFR Act). Section 16 of the FFR Act empowers the Minister to credit amounts to the COAG Reform Fund for the purpose of providing financial assistance to the States in the form of NPPs (s 16(1)). The terms and conditions of financial assistance granted through the COAG Reform Fund are set out in a written agreement between the Commonwealth and the State, as required by subsection 7(2) of the COAG Reform Fund Act 2008 (COAG Act). The determination provides that the total amount credited to the COAG Reform Fund for the purpose of making NPPs in the financial year starting on 1 July 2017 must not exceed $25,000,000,000.00 (s 16(3) FFR Act). The determination also stipulates the payment conditions, including the requirement for independent assessments for payments to reward nationally significant reforms and the conditions for payments to facilitate reform and to support the delivery of specified outputs or projects. The obligations and requirements imposed on the parties by the Act include the need for the Commonwealth to make NPPs in a prescribed manner, as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA). The agreement requires that payments are made on the 7th of each month, or the first business day thereafter, and that the terms and conditions of financial assistance are set out in a written agreement between the Commonwealth and the State. The States and Territories are required to meet the performance requirements in National Partnership agreements to receive funding. The determination also imposes an obligation on the Minister to make determinations as to whether payments will be made based on the achievement of pre-determined milestones or performance benchmarks, as outlined in the relevant National Partnership agreement. The Act does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach. However, failure to meet the performance requirements in National Partnership agreements could result in a failure to receive funding in accordance with the determination. The determination provides that payments will be scheduled in accordance with the payment profile set out in the National Partnership, and that payments will be made following receipt of an independent assessment as to whether a pre-determined performance benchmark has been achieved. The Act also provides that the Minister’s determinations in respect of NPPs are legislative instruments and are registered on the Federal Register of Legislation, but are not disallowable. This allows the Minister to ensure that the Commonwealth’s obligation under the IGA to make NPPs in a prescribed manner is met. Overall, the Federal Financial Relations (National Partnership payments) Determination No. 130 (February 2018) sets out the process and criteria for making NPPs under the FFR Act. It imposes obligations and requirements on the Commonwealth and the States and Territories to ensure that payments are made in accordance with the IGA and the relevant National Partnership agreement. The determination also provides a framework for the setting of performance requirements and the measurement of progress in delivering services, projects and reforms in sectors such as health, education, housing and community services. While the Act does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach, failure to meet the performance requirements in National Partnership agreements could result in a failure to receive funding in accordance with the determination.