EXPLANATORY STATEMENT
Federal Financial Relations ACt 2009
Federal Financial Relations (National Partnership payments) Determination 2011 No. 41 (November)
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 those jurisdictions that deliver on nationally significant reforms.
The new federal financial framework commenced on 1 January 2009. The payment provisions of the Intergovernmental Agreement 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 Intergovernmental Agreement to make National Partnership payments in a prescribed manner. Exemption from the disallowance provisions will allow 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 Ministerial Council for Federal Financial Relations website. There is also extensive consultation with the States on National Partnership payments as all parties are required to sign the National Partnership agreement.
Commencement
The determination commences on the day it was made.
Overview
The Federal Financial Relations (National Partnership payments) Determination 2011 was enacted in 2011 to provide a clear framework for the distribution of National Partnership payments under the Federal Financial Relations Act 2009. This determination was introduced to address the need for improved transparency and accountability in the allocation of funds under the Intergovernmental Agreement on Federal Financial Relations. The Federal Financial Relations Act 2009 was established to facilitate the implementation of economic and social reforms in areas of national importance through the provision of ongoing financial support to the states. The policy objective of the determination is to ensure that National Partnership payments are made in a prescribed manner, as mandated by the Intergovernmental Agreement. The determinations made by the Minister are legislative instruments and will be registered on the Federal Register of Legislative Instruments, but will not be disallowable, allowing the Minister to meet the obligation to make National Partnership payments.
Scope and Application
The Federal Financial Relations (National Partnership payments) Determination 2011, implemented under the Federal Financial Relations Act 2009, governs the allocation and management of National Partnership payments, which are intended to support specific outputs or projects, facilitate reforms, or reward jurisdictions that achieve nationally significant reforms. This legislation applies to the Minister for Finance, who is responsible for crediting amounts to the COAG Reform Fund established under the COAG Reform Fund Act 2008. These payments are aimed at supporting the States' service delivery efforts and are subject to the Intergovernmental Agreement on Federal Financial Relations. The determination clarifies that the Minister's decisions regarding National Partnership payments are legislative instruments and will be registered on the Federal Register of Legislative Instruments. Notably, these determinations are exempt from disallowance, allowing the Minister to fulfill the obligation to make National Partnership payments as prescribed by the Intergovernmental Agreement. The new federal financial framework, including these payment provisions, came into effect on 1 January 2009.
Key Provisions
The Federal Financial Relations (National Partnership payments) Determination 2011 (No. 41) (the Determination) outlines the mechanism through which the Minister for Finance credits amounts to the COAG Reform Fund to provide financial assistance to the States in the form of National Partnership payments (section 3). These payments are intended to support the delivery of specified outputs or projects, facilitate reforms, or reward jurisdictions that achieve nationally significant reforms. The Act ensures that these payments are made in accordance with the Intergovernmental Agreement on Federal Financial Relations (IGA) (section 4).
The obligations imposed by the Determination on the Commonwealth and the States include adherence to the terms of the IGA, ensuring that National Partnership payments are used for their intended purposes, and engaging in ongoing consultation and agreement processes. The Commonwealth is required to credit the COAG Reform Fund with the agreed amounts, while the States must report on the use of these funds and ensure compliance with the National Partnership agreements (section 5). The Minister must also ensure that the determinations made under the Act are consistent with the obligations set out in the IGA.
Breach of the obligations under the Determination could lead to various consequences. While the explanatory statement does not explicitly outline specific offences or penalties, non-compliance with the terms of the IGA or misuse of National Partnership payments could potentially result in legal challenges or disputes. The Commonwealth could face financial implications if it fails to credit the required amounts to the COAG Reform Fund, and the States could lose access to funding if they do not meet the agreed-upon criteria or report accurately on the use of funds. However, the precise legal consequences would depend on the specific terms of the IGA and the National Partnership agreements.