EXPLANATORY STATEMENT
Federal Financial Relations ACt
Federal Financial Relations (National Specific Purpose Payments) Determination 2009 No.1
The Intergovernmental Agreement on Federal Financial Relations 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 Specific Purpose Payments
The Federal Financial Relations Act 2009 provides an appropriation for the Commonwealth to make an on‑going financial contribution from 1 January 2009 to support State service delivery in the areas of:
• healthcare;
• schools;
• skills and workforce development;
• disability services; and
• affordable housing.
The Act provides for the Minister to determine the amount of financial assistance payable to the States as National SPPs in 2008‑09. This transitional arrangement is necessary to allow the Government to reconcile the total amount to be paid for the year, with the amount already paid under existing arrangements, in order to determine the correct payment for the remainder of the year.
The amounts and distribution of National SPPs in the Federal Financial Relations (National Specific Purpose Payments) Determination 2009 No.1 will ensure that each State will receive the full amount of these payments for 2008-09 as agreed by the Council of Australian Governments in November 2008, once payments to date by line agencies are accounted for.
To improve transparency, the Treasurer’s determination is a legislative instruments and will be registered on the Federal Register of Legislative Instruments, but will not be disallowable.
• Determinations made by the Minister under subsections 11(2)(a), 12(2)(a), 13(2)(a) and 14(2)(a) would not otherwise be legislative instruments within the meaning of section 5 of the Legislative Instruments Act 2003.
The exemption will allow the Treasurer to fulfil his obligation to make these payments to the States within the financial year. If the Treasurer was to wait for the determination to be tabled in Parliament for the required number of sitting days, they would not be able to make the payment until 2009-10.
• If the payments were delayed until the following financial year, then this would have significant impact on the fiscal positions of the States.
Commencement
The determination commences on the day it was made.
Overview
The Federal Financial Relations Act 2009 was enacted to establish a robust framework for federal financial relations in Australia, facilitating collaboration on policy development and service delivery. This legislation was introduced by the Parliament of Australia to address the need for a new financial framework to support state service delivery in critical sectors, as agreed by the Council of Australian Governments in November 2008. The Act provides for ongoing financial support through general purpose payments, National Specific Purpose Payments (National SPPs) for key service sectors, and National Partnership payments to support specific outputs, reforms, or reward jurisdictions that deliver nationally significant reforms. The Federal Financial Relations (National Specific Purpose Payments) Determination 2009 No.1 was made to ensure that each state receives the full amount of these payments for the 2008-09 financial year, improving transparency by making the Treasurer’s determination a legislative instrument registered on the Federal Register of Legislative Instruments.
Scope and Application
The Federal Financial Relations (National Specific Purpose Payments) Determination 2009 No. 1 applies to the Commonwealth government, specifically to the Minister, who is tasked with determining the amount of National Specific Purpose Payments (National SPPs) to be made to the states for the year 2008-09. This determination ensures the smooth transition of payments as agreed upon by the Council of Australian Governments in November 2008, providing the necessary financial support to states for their service delivery in healthcare, schools, skills and workforce development, disability services, and affordable housing. The determination is made under the Federal Financial Relations Act 2009 and is intended to provide the states with their full allocation for the financial year, avoiding any delays that could impact their fiscal positions. This determination is not disallowable and is registered on the Federal Register of Legislative Instruments to enhance transparency. The geographic reach of the Act is national, as it involves the federal government and all states within Australia. The Act does not specify any exclusions or exemptions, and its application extends through subordinate instruments to ensure the correct distribution of funds as determined by the Minister.
Key Provisions
The main operative sections of the Federal Financial Relations (National Specific Purpose Payments) Determination 2009 No.1 (section 4(2)) require the Minister to make payments to States as National Specific Purpose Payments (National SPPs) to support service delivery in healthcare, schools, skills and workforce development, disability services, and affordable housing. These payments are to ensure that each State receives the full amount agreed upon by the Council of Australian Governments for the 2008-09 financial year. The Minister must determine the amount of financial assistance payable to the States to reconcile the total amount to be paid for the year with the amount already paid under existing arrangements.
The Act imposes obligations on the Minister to ensure that the payments are made in a timely manner to support the States’ service delivery efforts. It also requires the Minister to ensure that the total amount paid aligns with the agreed financial contributions for the year, which includes accounting for any payments already made by line agencies. The Minister's determinations are subject to registration on the Federal Register of Legislative Instruments but are exempt from disallowance to avoid delays in payments that could significantly impact the fiscal positions of the States.
The determination does not explicitly detail specific offences or penalties for breach. However, failure to comply with the requirements to make timely and accurate payments could result in civil or administrative consequences, as the legislation focuses on ensuring that the agreed financial contributions are made without undue delay. The Act’s emphasis is on facilitating the smooth flow of financial support to the States, rather than on punitive measures for non-compliance.
In summary, the Federal Financial Relations (National Specific Purpose Payments) Determination 2009 No.1 outlines the Minister's responsibility to make timely payments to States for specific service delivery areas. The Minister's determinations are crucial for ensuring that States receive their agreed financial support, with a focus on transparency and the avoidance of fiscal disruptions.