EXPLANATORY STATEMENT
Federal Financial Relations ACt 2009
Federal Financial Relations (National Partnership payments) Determination
No. 76 (March 2014)
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 jurisdictions that deliver on nationally significant reforms.
The federal financial framework commenced on 1 January 2009. The payment provisions of the IGA 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 IGA to make National Partnership payments in a prescribed manner. Exemption from the disallowance provisions allows 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 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 framework for the provision of financial support to the states in Australia, ensuring collaboration on policy development and service delivery. This Act was introduced to address the need for a robust and transparent system of financial assistance, including general purpose financial assistance, National Specific Purpose Payments, and National Partnership payments. The enacting body for this Act is the Commonwealth Parliament, which committed to this new framework to facilitate economic and social reforms in areas of national importance, as agreed under the Intergovernmental Agreement on Federal National Relations. The policy objective of the Act is to provide ongoing financial support for states’ service delivery efforts, with a particular focus on enhancing transparency and accountability through the creation of legislative instruments for National Partnership payments, which are exempt from disallowance provisions to meet the obligation of making such payments as prescribed.
Scope and Application
The Federal Financial Relations (National Partnership Payments) Determination No. 76, made under the Federal Financial Relations Act 2009, applies to the Minister responsible for making payments into the COAG Reform Fund for the provision of 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 implement nationally significant reforms. The determination applies to all States and territories within Australia, thereby establishing a consistent framework for federal financial support across all jurisdictions. It is important to note that these determinations are legislative instruments and are registered on the Federal Register of Legislative Instruments, though they are exempt from disallowance provisions to ensure that the Minister can fulfil their obligations under the Intergovernmental Agreement on Federal Financial Relations (IGA). The IGA, which serves as the basis for these payments, was developed through extensive consultation with all States and Territories and was signed by all parties in December 2008. The determination itself commences on the day it was made, ensuring timely implementation of the agreed financial support mechanisms.
Key Provisions
The Federal Financial Relations (National Partnership payments) Determination No. 76 outlines the key provisions and requirements for National Partnership payments under the Federal Financial Relations Act 2009 (sections 9 and 10). This Determination clarifies that the Minister for Finance is required to credit amounts to the COAG Reform Fund to provide financial assistance to the States. These payments are intended to support the delivery of specified outputs or projects, facilitate reforms, or reward jurisdictions that achieve nationally significant reforms.
The obligations imposed by this Determination include ensuring that the Minister credits the appropriate amounts to the COAG Reform Fund in accordance with the Intergovernmental Agreement on Federal Financial Relations (IGA). This is a mandatory requirement, as the Minister has an obligation under the IGA to make National Partnership payments in a prescribed manner. The determination also clarifies that the Minister's determinations regarding National Partnership payments are legislative instruments, which will be registered on the Federal Register of Legislative Instruments. However, these determinations are exempt from the disallowance provisions under the Legislative Instruments Act 2003, allowing the Minister to meet their obligations under the IGA.
There are no specific offences, penalties, or consequences outlined in this Determination for non-compliance with the National Partnership payments. However, failure to comply with the IGA or the requirements of this Determination could potentially lead to broader consequences under the Federal Financial Relations Act 2009 or other relevant legislation. The primary focus of this Determination is to ensure that the Minister can meet their obligations under the IGA and provide National Partnership payments to the States in a transparent and accountable manner.