EXPLANATORY STATEMENT
Federal Financial Relations ACt 2009
Federal Financial Relations (National Partnership payments) Determination
No. 66 (July 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 establish a new framework for federal financial relations in Australia, aimed at enhancing collaboration between the Commonwealth and the States in the development and delivery of economic and social policies. This Act was introduced to address the need for a more structured and transparent approach to financial support for state-level service delivery efforts, ensuring that the Commonwealth's financial assistance aligns with national priorities and reforms. The Federal Financial Relations Act 2009 provides for various forms of financial support, including general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. The latter are intended to support the delivery of specified outputs or projects, facilitate reforms, or reward jurisdictions that achieve nationally significant reforms. The Act was passed by the Australian Parliament, reflecting a commitment to the principles of the Intergovernmental Agreement on Federal Financial Relations, which was extensively consulted upon and signed by all jurisdictions in December 2008. The policy objective of the Act is to improve transparency and accountability in federal financial relations, while also ensuring that the Commonwealth can meet its obligations under the Agreement.
Scope and Application
The Federal Financial Relations (National Partnership payments) Determination No. 66, made under the Federal Financial Relations Act 2009, applies to the Minister for Finance in their role of crediting amounts to the COAG Reform Fund for National Partnership payments. These payments are intended to provide financial assistance to states in support of specified outputs, projects, reforms, or rewards for jurisdictions that deliver on nationally significant reforms. The Act applies to the Commonwealth government, the states, and territories of Australia, and it is designed to facilitate the implementation of economic and social reforms in areas of national importance. The Act extends its jurisdiction across the entire nation, encompassing all states and territories within the Australian federation. The determination is not subject to disallowance, which allows the Minister to meet their obligations under the Intergovernmental Agreement without hindrance. The Minister's determinations are legislative instruments and are registered on the Federal Register of Legislative Instruments, enhancing transparency and accountability in the distribution of National Partnership payments. The Act does not specify any exclusions or exemptions, and its application is not restricted through subordinate instruments.
Key Provisions
The Federal Financial Relations (National Partnership payments) Determination No. 66 (July 2013) pertains to the framework established by the Intergovernmental Agreement on Federal Financial Relations (IGA) to facilitate collaboration between the Commonwealth and the States. Section 9(1) of the Federal Financial Relations Act 2009 allows the Minister to credit amounts 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 obligations under the Act require the Commonwealth to provide ongoing financial support to the States for service delivery efforts. This includes general purpose financial assistance, National Specific Purpose Payments (National SPPs), and National Partnership payments. The Minister must make these payments in a prescribed manner as outlined in the IGA, which was extensively consulted on and signed by all jurisdictions in December 2008. The COAG Reform Fund Act 2008 establishes the COAG Reform Fund as a Special Account, ensuring transparency and accountability in the financial management of these payments.
In terms of compliance, the Minister’s determinations regarding National Partnership payments are legislative instruments and will be registered on the Federal Register of Legislative Instruments. These determinations, however, are exempt from disallowance to allow the Minister to meet the obligations set out in the IGA. This exemption ensures that the Commonwealth can continue to provide the necessary financial support to the States without administrative hindrance.
The determination imposes penalties for breaches of the Act, although the specific maximum penalties are not stated in the explanatory statement. Civil and criminal consequences may apply for non-compliance with the requirements of the Act, underscoring the importance of adhering to the prescribed payment and consultation processes. The framework ensures that the financial support provided under the IGA is both transparent and effective in achieving its policy objectives.