EXPLANATORY STATEMENT
Federal Financial Relations ACt 2009
Federal Financial Relations (National Partnership Payments) Determination No. 49 (June 2012)
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 No. 49, made in June 2012 under the Federal Financial Relations Act 2009, establishes a framework for the allocation of National Partnership payments to the states. This legislative instrument was enacted to ensure ongoing financial support for state service delivery efforts, in line with the commitments made in the Intergovernmental Agreement on Federal Financial Relations (IGA). The Act aims to provide transparency and clarity in the financial assistance provided to states for specified outputs or projects, reforms, and reward mechanisms for jurisdictions that successfully implement nationally significant reforms. This determination is a legislative instrument, registered on the Federal Register of Legislative Instruments, and is not subject to disallowance, ensuring the Minister can fulfil the obligation to make National Partnership payments in a prescribed manner as per the IGA.
The Federal Financial Relations Act 2009 was enacted by the Commonwealth Parliament to implement the payment provisions of the IGA. The Act facilitates the crediting of amounts to the COAG Reform Fund for National Partnership payments, established under the COAG Reform Fund Act 2008. Extensive consultation with the states was undertaken to develop the IGA, which was signed by all jurisdictions in December 2008 and is publicly available. This determination is part of the ongoing commitment to improve transparency and accountability in the allocation of federal financial assistance to states.
Scope and Application
The Federal Financial Relations (National Partnership Payments) Determination No. 49, 2012, pertains to the implementation of the National Partnership payments outlined in the Federal Financial Relations Act 2009. This legislation applies to the Minister for Finance, who is responsible for crediting amounts to the COAG Reform Fund to provide financial assistance to the States. These payments are intended to support specified outputs or projects, facilitate reforms, or reward jurisdictions that achieve nationally significant reforms. The Act applies nationally across Australia, as it concerns federal financial relations and the distribution of funds from the Commonwealth to the States to support service delivery and reform initiatives. There are no stated exclusions or exemptions within the scope of this determination; however, the application of these payments is contingent on the terms set out in the intergovernmental agreements and the specific National Partnership agreements between the Commonwealth and the States. The application of the Act may be further refined or expanded through subordinate instruments, which would also need to be consulted to understand the full scope and details of the implementation of National Partnership payments.
Key Provisions
The Federal Financial Relations (National Partnership Payments) Determination No. 49, made under the Federal Financial Relations Act 2009, outlines the key provisions for the distribution of National Partnership payments. Section 9(1) of the Act provides that the Minister may credit amounts to the COAG Reform Fund for the purpose of providing National Partnership payments to the states. These payments are intended to support the delivery of specified outputs or projects, facilitate reforms, or reward jurisdictions that deliver on nationally significant reforms. The determination also stipulates that these payments are to be made in accordance with the terms of the Intergovernmental Agreement on Federal Financial Relations, which was signed by all jurisdictions in December 2008.
The obligations imposed on the parties by this Act are primarily centred around the provision and receipt of National Partnership payments in a manner consistent with the Intergovernmental Agreement. The Commonwealth, through the Minister, is required to make payments to the COAG Reform Fund in a prescribed manner, ensuring that the funds are used for the purposes outlined in the Agreement. The states, in turn, are expected to utilise these payments in accordance with the specific agreements made under the National Partnership framework, which must be signed by all parties involved. Additionally, the Minister must ensure that these determinations are registered on the Federal Register of Legislative Instruments, enhancing transparency and accountability in the financial relations between the Commonwealth and the states.
Failure to comply with the provisions of the Federal Financial Relations Act 2009 or the determinations made thereunder may result in civil or criminal consequences. While specific offences and penalties are not detailed in the explanatory statement, breaches of the Act or its determinations could potentially lead to legal action. The seriousness of any breach would likely be assessed based on the specific circumstances, including the extent of non-compliance and any resulting harm or financial loss. It is important to note that the Minister's determinations, while legislative instruments, are exempt from disallowance provisions, which ensures that the Minister can continue to meet their obligations under the Intergovernmental Agreement.