EXPLANATORY STATEMENT
Issued by authority of the Treasurer/Assistant Treasurer/Minister for Financial Services and SuperannuationFederal Financial Relations ACt 2009
Federal Financial Relations (National Partnership payments) Determination
No. 95 (June 2015)
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 they are also required to sign relevant National Partnership agreements.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
It is difficult to assess the human rights compatibility of either the determination or the making of National Partnership payments as the amounts paid to each state vary each month, since individual States meet varying milestones and benchmarks under different National Partnership Agreements. However, in general, National Partnership Agreements will promote multiple human rights by facilitating the provision of additional funding to the States to support service delivery in a range of areas. As such, neither this determination nor the making of National Partnership payments could be said to have a detrimental impact on any human rights.
Commencement
The determination commences on the day it was made.
Overview
The Federal Financial Relations Act 2009 was enacted to implement the intergovernmental agreements on federal financial relations and ensure a stable and predictable flow of funding to the states, thereby enhancing the efficiency and effectiveness of public services across Australia. This Act addresses the need for a robust framework that supports collaboration between the Commonwealth and the states, particularly in the context of service delivery and economic and social reforms. The Federal Financial Relations Act 2009 was passed by the Australian Parliament and its policy objective is to provide ongoing financial support to states for their service delivery efforts, including through National Partnership payments. These payments are designed to facilitate reforms and support the delivery of specified outputs or projects that are of national significance, as agreed upon through the Intergovernmental Agreement on Federal Financial Relations. The determinations regarding National Partnership payments, which are legislative instruments, are made by the Minister and are intended to clarify the obligations and processes involved in these payments, while also ensuring that they are transparent and subject to appropriate consultation with the states.
Scope and Application
The Federal Financial Relations Act 2009 applies to the Commonwealth government, the states, and the territories within Australia. The Act provides for the distribution of financial assistance to the states through the COAG Reform Fund, including National Partnership payments. The National Partnership payments aim to support the delivery of specified outputs or projects, facilitate reforms, or reward jurisdictions that deliver on nationally significant reforms. The scope of the Act extends to the Minister’s obligation to credit amounts to the COAG Reform Fund for National Partnership payments, as outlined in the intergovernmental agreement. The Minister’s determinations regarding these payments are legislative instruments and are registered on the Federal Register of Legislative Instruments, although they are exempt from disallowance provisions. This ensures the Minister can meet the obligation to make National Partnership payments as prescribed in the Intergovernmental Agreement on Federal Financial Relations.
Key Provisions
The Federal Financial Relations Act 2009 (section 9) allows the Minister to credit the COAG Reform Fund with amounts intended for National Partnership payments. These payments are a form of financial assistance to the states to support specific outputs or projects, facilitate reforms, or reward jurisdictions that deliver on nationally significant reforms. The Act ensures that these payments are made in a prescribed manner in accordance with the Intergovernmental Agreement on Federal Financial Relations (IGA). The Minister's determinations regarding these payments are legislative instruments and are registered on the Federal Register of Legislative Instruments, though they are exempt from disallowance provisions to allow for the timely fulfilment of the Minister's obligations under the IGA.
The obligations imposed by the Act on the parties include the requirement for the Minister to make National Partnership payments as per the IGA, and for the states to meet the milestones and benchmarks outlined in the relevant National Partnership Agreements. The COAG Reform Fund, established under the COAG Reform Fund Act 2008, serves as a Special Account for these payments and is subject to the Financial Management and Accountability Act 1997. Extensive consultation with the states is mandated, as they must sign the IGA and relevant National Partnership Agreements, ensuring alignment and cooperation in service delivery and reforms.
Offences and penalties under the Act for breach of the provisions are not explicitly stated in the explanatory statement. However, non-compliance with the requirements to make payments as per the IGA, or failure to meet agreed milestones and benchmarks in National Partnership Agreements, could result in significant financial and reputational consequences for the states involved. The determination itself is not subject to disallowance, but the broader implications of failing to adhere to the terms of the IGA could include reduced or withheld future payments, impacting the states' ability to deliver services and achieve agreed reforms. The Act ensures transparency and accountability through the registration of the Minister's determinations on the Federal Register of Legislative Instruments.