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. 96 (July 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 provide a structured framework for the Commonwealth's financial support to the states, facilitating collaborative efforts in policy development and service delivery. The Act was introduced to address the need for a robust system of intergovernmental financial relations, ensuring that states receive adequate funding for specified outputs, projects, and reforms as agreed under the Intergovernmental Agreement on Federal Financial Relations. This legislation was passed by the Australian Parliament and aims to enhance transparency and accountability in the distribution of National Partnership payments. The Act allows the Minister to credit amounts to the COAG Reform Fund for National Partnership payments, which are legislative instruments and thus exempt from disallowance provisions, ensuring the Minister can meet their obligations under the IGA. This legislative framework underscores the commitment to ongoing financial support for states' service delivery efforts, fostering a cooperative approach to national economic and social reforms.
Scope and Application
The Federal Financial Relations Act 2009 applies to the Australian Commonwealth Government and the states, with the Minister for Financial Services and Superannuation having the authority to make determinations regarding National Partnership payments, which are legislative instruments and registered on the Federal Register of Legislative Instruments. These payments, which are not subject to disallowance, are made to support specified outputs, projects, reforms, or to reward jurisdictions that achieve nationally significant reforms. The determination clarifies that these payments are not legislative instruments under the Legislative Instruments Act 2003, but rather an obligation under the Intergovernmental Agreement on Federal Financial Relations. The Act facilitates collaboration on policy development and service delivery, implementing economic and social reforms in areas of national importance. While the human rights compatibility of these payments is difficult to assess due to varying amounts paid to each state, the general intent is to promote multiple human rights by providing additional funding to states for service delivery in various areas. The Act commenced on 1 January 2009 and its payment provisions are implemented through the Federal Financial Relations Act 2009.
Key Provisions
The Federal Financial Relations Act 2009 (section 9) enables the Minister for Financial Services and Superannuation to credit the COAG Reform Fund with amounts for National Partnership payments. These payments are intended to provide financial assistance to states and territories to support the delivery of specific outputs or projects, facilitate reforms, or reward jurisdictions that implement nationally significant reforms. The Act requires the Minister to make these determinations, which are registered on the Federal Register of Legislative Instruments. Notably, these determinations are not subject to disallowance, ensuring that the Minister can fulfil their obligations under the Intergovernmental Agreement on Federal Financial Relations (IGA).
Entities governed by this Act, specifically the Minister and the COAG Reform Fund, have clear obligations. The Minister must credit the COAG Reform Fund with the amounts determined for National Partnership payments. The Fund, established under the COAG Reform Fund Act 2008, holds these credits as a Special Account under the Financial Management and Accountability Act 1997. This arrangement ensures that the funds are managed and accounted for transparently and in accordance with established financial management principles.
While the Act itself does not explicitly outline specific offences or penalties for non-compliance, breaches of the obligations under the IGA could potentially lead to legal consequences. However, the Act does not prescribe specific penalties for breaches. Instead, the focus is on the transparent and accountable management of funds to support the agreed-upon reforms and service delivery initiatives. The primary consequence of non-compliance would likely involve legal actions to enforce the terms of the IGA and the proper use of funds within the established framework.