EXPLANATORY STATEMENT
Federal Financial Relations ACt 2009
Federal Financial Relations (National Partnership payments) Determination
No. 61 (April 2013)
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 Act 2009 was enacted to facilitate a robust framework for collaboration between the Commonwealth and the States, addressing the need for coordinated economic and social reforms across Australia. This legislation was introduced to support the implementation of the Intergovernmental Agreement on Federal Financial Relations, which aims to enhance policy development and service delivery through structured financial support mechanisms. The Act was passed by the Australian Parliament, with the intention of providing a stable financial foundation for the States to achieve significant reforms and deliver essential services effectively. National Partnership payments, a key feature of this Act, are designed to support specific outputs or projects, encourage reforms, and reward jurisdictions that deliver on nationally significant initiatives, thereby fostering cooperative federalism.
Scope and Application
The Federal Financial Relations (National Partnership payments) Determination No. 61, made under the Federal Financial Relations Act 2009, applies to the Minister for Finance, who is responsible for making crediting payments to the COAG Reform Fund for National Partnership payments. 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 Act applies to all states and territories within Australia, reinforcing the commitment of the Commonwealth to providing ongoing financial support for the states' service delivery efforts as outlined in the Intergovernmental Agreement on Federal Financial Relations (IGA). The IGA, which was signed by all jurisdictions in December 2008, provides a framework for collaboration on policy development and service delivery and facilitates the implementation of economic and social reforms in areas of national importance. The Act’s application is broad, encompassing any agreements and payments stipulated under the IGA, and it does not exclude any states or territories within its jurisdiction. The Act’s geographic reach is national, affecting all states and territories in Australia. The Act extends its application through subordinate instruments, which are subject to registration on the Federal Register of Legislative Instruments and are not subject to disallowance, ensuring the Minister can meet the obligations outlined in the IGA.
Key Provisions
The Federal Financial Relations (National Partnership Payments) Determination No. 61, 2013, under the Federal Financial Relations Act 2009, sets out the framework for the distribution of National Partnership payments from the COAG Reform Fund (sections 1 and 2). These payments are designed to support specific outputs, projects, reforms, or to reward jurisdictions that achieve nationally significant reforms (section 3). The determination specifies that the Minister will credit amounts to the COAG Reform Fund to provide financial assistance to states in the form of National Partnership payments (section 4).
Under this Act, the Minister is obligated to credit the COAG Reform Fund in a prescribed manner, adhering to the Intergovernmental Agreement on Federal Financial Relations (IGA) (section 9). This involves detailed consultation with the States, which are required to sign the National Partnership agreement, ensuring that all parties are aligned on the terms and objectives of these payments (section 11). The Minister's determinations regarding these payments are legislative instruments and are registered on the Federal Register of Legislative Instruments, but they are exempt from disallowance provisions (section 5). This exemption is crucial as it allows the Minister to meet the obligations set out in the IGA without the risk of the determinations being disallowed.
The Act also imposes obligations on the parties involved. The Commonwealth must provide the financial support as outlined in the IGA, including National Partnership payments, while the States are required to use these funds for the purposes specified in the National Partnership agreement (sections 6 and 7). Additionally, the Minister must ensure that these payments are made transparently and in accordance with the agreement, which is publicly available (section 12). The States, in turn, must report on the use of these funds and the outcomes of the projects or reforms they finance.
Breach of the obligations set out in the IGA or the terms of the National Partnership agreement can result in civil or criminal consequences. While specific penalties are not detailed in the explanatory statement, breaches of the Act or the IGA could potentially lead to legal action or financial penalties. The exact penalties would depend on the nature and severity of the breach, as well as any additional legislation or regulations that may apply.