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. 99 (October 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 formalise and provide a robust framework for federal financial relations in Australia, addressing the need for effective collaboration and service delivery between the Commonwealth and the States. This Act was introduced by the Australian Parliament to implement the Intergovernmental Agreement on Federal Financial Relations, which facilitates the provision of financial assistance to States for specific purposes, including National Partnership payments to support service delivery and reforms. These payments are intended to foster cooperation and ensure that economic and social reforms are effectively implemented across the nation. The Act aims to enhance transparency and accountability by ensuring that determinations made by the Minister regarding National Partnership payments are legislative instruments and are registered on the Federal Register of Legislative Instruments. Notably, these determinations are exempt from disallowance provisions, allowing the Minister to meet the obligations under the Intergovernmental Agreement. The Act's policy objective is to promote a collaborative approach to service delivery and economic reforms through structured financial support mechanisms, thereby addressing gaps in intergovernmental cooperation and funding.
Scope and Application
The Federal Financial Relations Act 2009 applies to the Australian government and the states and territories, establishing a framework for federal financial relations and the distribution of funds. The Act facilitates the provision of financial assistance to the states in the form of National Partnership payments, which support the delivery of specified outputs or projects, facilitate reforms, or reward jurisdictions that deliver on nationally significant reforms. These payments are made in accordance with the Intergovernmental Agreement on Federal Financial Relations and are implemented through the Act. The scope of the Act includes the crediting of amounts to the COAG Reform Fund for the purpose of making these payments, ensuring that the funds are used in accordance with the National Partnership Agreements signed by the relevant jurisdictions. The Act's application is national, covering all states and territories within Australia, with no exclusions specified in the explanatory statement. The Act extends its application through subordinate instruments, such as the National Partnership payments determinations made by the Minister, which are registered on the Federal Register of Legislative Instruments but are not subject to disallowance.
Key Provisions
The Federal Financial Relations Act 2009 (section 9(1)) mandates the Minister to credit amounts to the COAG Reform Fund to provide financial assistance to the States in the form of National Partnership payments. This mechanism ensures a structured approach to the distribution of funds, aimed at supporting specific outputs or projects, facilitating reforms, or rewarding jurisdictions that implement nationally significant reforms. These payments are integral to the broader framework of federal financial relations, which commenced on 1 January 2009.
The obligations imposed by the Act require the Minister to make National Partnership payments in a prescribed manner, as stipulated by the intergovernmental agreement. This obligation is further reinforced by the necessity for extensive consultation with the states, ensuring that all jurisdictions are aligned with the objectives and requirements of the National Partnership payments. Additionally, the determinations made by the Minister under section 9(1) are legislative instruments and are registered on the Federal Register of Legislative Instruments, although they are exempt from the disallowance provisions. This exemption is crucial as it allows the Minister to meet their obligations under the Intergovernmental Agreement on Federal Financial Relations without hindrance.
Breaches of the provisions outlined in the Federal Financial Relations Act 2009 can lead to significant civil or administrative consequences. While specific offences and penalties are not detailed in the Explanatory Statement, the Act's framework is designed to ensure compliance through structured financial support and oversight mechanisms. The legislative instruments and agreements underpinning the National Partnership payments are intended to maintain transparency and accountability, thereby minimizing the risk of non-compliance. The determination itself clarifies that the Minister's actions, although subject to legislative scrutiny, are not disallowable, ensuring continuity in the provision of financial assistance to the states.