EXPLANATORY STATEMENT
Federal Financial Relations ACt 2009
National Specific Purpose Payment Determination 2010-11
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 ongoing financial support for the States’ service delivery efforts through:
• general purpose financial assistance, including the ongoing provision of GST payments, to be used by the States for any purpose;
• National Specific Purpose Payments (National SPPs) to be spent in 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 IGA are implemented through the Federal Financial Relations Act 2009 (the Act).
National Specific Purpose Payments (National SPPs)
Under the IGA, the Commonwealth provides National SPPs to the States and Territories as a financial contribution to support State and Territory service delivery in the areas of healthcare, schools, skills and workforce development, disability, and housing.
The Act provides for the Minister to determine for each financial year, the total amount and the manner in which National SPPs are distributed between the States and Territories. The Act also requires the Minister have regard to the IGA when making a determination for National SPPs.
Advance payments in respect of the National SPPs are provided throughout the financial year based on estimates of each jurisdictions’ anticipated entitlement. Any adjustment between the advances paid to a jurisdiction and the jurisdictions’ determined entitlement is made in the first practicable payment in the subsequent financial year.
The Minister’s determination in respect of National SPPs is a legislative instrument and will be registered on the Federal Register of Legislative Instruments.
Part 3 of the Act and ‘Schedule D — Payment Arrangements’ to the IGA provide that the States are required to spend each National SPP in the service sector relevant to the payment. However, the State have full budget flexibility to allocate funds within that sector as they see fit to achieve any mutually agreed objectives for that sector.
This Determination is in accordance with Part 3 of the Act, which provides for the Minister, by legislative instrument, to determine the total amounts payable to each service sector, the manner in which these total amounts are indexed, and the manner in which these amounts are divided between the States.
Financial assistance for non-government schools is provided under the Schools Assistance Act 2008, and therefore is not included in this Determination.
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 website for the Ministerial Council for Federal Financial Relations. Consultation with the States on National SPPs also occurs regularly, principally through meetings between Heads of Treasuries.
Commencement
The Determination commences on the day it was made.