FEDERAL FINANCIAL RELATIONS BILL 2009

i Federal Financial Relations Bill 2009 No. , 2009

Contents

Part 1--Preliminary

Short title ............................................................................................ 1

Commencement .................................................................................. 1

Object.................................................................................................. 2

Definitions .......................................................................................... 2

Part 2--General revenue assistance

Division 1--GST revenue grants

GST revenue grants ............................................................................ 5

GST revenue ....................................................................................... 5

Determination of population of a State............................................... 7

GST revenue sharing relativity ........................................................... 7

Division 2--Other general revenue assistance

General purpose financial assistance .................................................. 8

Part 3--National specific purpose payments

National specific purpose payments for healthcare .......................... 10

National specific purpose payments for schools .............................. 10

National specific purpose payments for skills and workforce

development...................................................................................... 11

National specific purpose payments for disability services.............. 12

National specific purpose payments for housing services ................ 13

Total amount of financial assistance for the 2008-2009

financial year .................................................................................... 14

Part 4--National partnership payments

National partnership payments ......................................................... 15

Part 5--Payment of grants

Advance payments for financial year ............................................... 17

Overpayment or underpayment of grant........................................... 17

Minister may fix amounts, and times of payments, of

financial assistance ........................................................................... 18

Repayment if condition not fulfilled................................................. 18

Part 6--Miscellaneous

Minister to have regard to Intergovernmental Agreement and

other agreements ............................................................................... 19

Appropriation.................................................................................... 19

Delegation......................................................................................... 19

Part 1 Preliminary

Section 3

2 Federal Financial Relations Bill 2009 No. , 2009

3 Object

The object of this Act is to provide ongoing financial support for

the delivery of services by the States, through:

(a) general revenue assistance, including the provision of GST

revenue grants, to be used by the States for any purpose; and

(b) national specific purpose payments, to be spent by the States

on certain service delivery sectors; and

(i) support the delivery by the States of specified outputs or

projects; or

(ii) facilitate reforms by the States; or

(iii) reward the States for nationally significant reforms.

4 Definitions

In this Act:

Appropriation Act means an Act appropriating money for

expenditure out of the Consolidated Revenue Fund.

COAG Reform Fund means the COAG Reform Fund established

by section 5 of the COAG Reform Fund Act 2008.

drawing right means a drawing right issued under section 27 of the

Financial Management and Accountability Act 1997.

estimated population of a State has the meaning given by

section 7.

general interest charge means the charge worked out under

Part IIA of the Taxation Administration Act 1953.

GST has the same meaning as in the GST Act.

GST Act means the A New Tax System (Goods and Services Tax)

Act 1999.

GST Imposition Acts means the following Acts:

(a) the A New Tax System (Goods and Services Tax Imposition--

Customs) Act 1999;

Preliminary Part 1

Section 4

Federal Financial Relations Bill 2009 No. , 2009 3

(b) the A New Tax System (Goods and Services Tax Imposition--

Excise) Act 1999;

General) Act 1999;

(d) the A New Tax System (Goods and Services Tax Imposition

(Recipients)--Customs) Act 2005;

(e) the A New Tax System (Goods and Services Tax Imposition

(Recipients)--Excise) Act 2005;

(f) the A New Tax System (Goods and Services Tax Imposition

(Recipients)--General) Act 2005.

GST law has the same meaning as in the GST Act.

GST refund provision means a provision of a Commonwealth law

the effect of which is to require the Commonwealth to refund some

or all of an amount of GST that has been paid, whether or not the

provision also applies in relation to other kinds of tax.

GST revenue has the meaning given by section 6.

GST revenue sharing relativity for a State for a payment year has

the meaning given by section 8.

Intergovernmental Agreement means the Intergovernmental

Agreement on Federal Financial Relations that took effect on

1 January 2009.

Note:

The Intergovernmental Agreement on Federal Financial Relations

provides an overarching framework for financial transfers between the

Commonwealth and the States and related collaboration on policy

development and service delivery.

luxury car tax law has the meaning given by section 27-1 of the A

New Tax System (Luxury Car Tax) Act 1999.

payment year means:

(a) the financial year starting on 1 July 2009; and

(b) each succeeding financial year.

These are described by a figure referring to 2 years (for example,

the 2009-10 payment year is the payment year starting on 1 July

2009).

General revenue assistance Part 2

GST revenue grants Division 1

Section 5

Federal Financial Relations Bill 2009 No. , 2009 5

Part 2--General revenue assistance

Division 1--GST revenue grants

5 GST revenue grants

Subject to this Act, each State is entitled to the payment, by way of

financial assistance, for a payment year, of a grant worked out

using the formula:

Adjusted State population

GST revenue

Adjusted total population

where:

adjusted State population means the estimated population of the

State on 31 December in the payment year (see section 7)

multiplied by the GST revenue sharing relativity (see section 8) for

the State for that year.

adjusted total population means the sum of the adjusted State

populations of all of the States for the payment year.

GST revenue means the GST revenue for the payment year (see

section 6).

6 GST revenue

(1) The Minister must make a determination for each of the matters

covered by subsections (3) and (4) stating the amount for the

payment year.

(2) The GST revenue for a payment year is the difference between:

(a) the sum of all of the amounts determined for matters covered

by subsection (3) for the payment year; and

(b) the sum of all of the amounts determined for matters covered

by subsection (4) for the payment year.

(3) The matters are:

Part 2 General revenue assistance

Division 1 GST revenue grants

Section 6

6 Federal Financial Relations Bill 2009 No. , 2009

(a) the amount of GST that was collected; and

(b) the amount of general interest charge that was collected to

the extent that it is attributable to:

(i) unpaid GST; or

(ii) unpaid general interest charge, being general interest

charge payable in respect of unpaid GST; and

Taxation where the payment represents an amount of GST

that would have been payable if the Constitution did not

prevent tax from being imposed on property of any kind

belonging to a State and if section 5 of the GST Imposition

Acts had not been enacted; and

(d) the amount of additional amounts of GST that would have

been collected if the Commonwealth and Commonwealth

entities could be made subject to taxation by a

Commonwealth law and if section 177-1 of the GST Act

made those entities actually liable rather than notionally

liable; and

(e) the amount, determined in a manner agreed by the

Commonwealth and all of the States, that represents amounts

of voluntary GST payments that should have, but have not,

been paid by local government bodies.

(4) The matters are:

(a) the amount that was paid under the GST refund provisions;

and

(b) the amount that was payable under the GST refund

provisions and that (rather than being paid directly under

those provisions) was allocated, applied or refunded in

accordance with Part IIB of the Taxation Administration Act

1953;

to the extent that the amounts are attributable to GST.

(5) In making determinations for the purposes of this section, the

Minister must make such adjustments as are necessary to ensure

that any effect that the luxury car tax law or wine equalisation tax

law would otherwise have on the amounts of GST, and the

amounts attributable to GST, is removed.

General revenue assistance Part 2

GST revenue grants Division 1

Section 7

Federal Financial Relations Bill 2009 No. , 2009 7

(6) A determination made under subsection (1) is not a legislative

instrument.

7 Determination of population of a State

The estimated population of a State on 31 December in a payment

year is the population of the State on that date as determined by the

Australian Statistician after that date and before 31 August in the

following payment year.

8 GST revenue sharing relativity

(1) The Minister may determine that a factor specified in the

determination is the GST revenue sharing relativity for a State for

a payment year.

(2) Before making a determination under subsection (1), the Minister

must consult each of the States.

(3) A determination under subsection (1) is a legislative instrument,

but section 42 (disallowance) of the Legislative Instruments Act

2003 does not apply to the determination.

Part 2 General revenue assistance

Division 2 Other general revenue assistance

Section 9

8 Federal Financial Relations Bill 2009 No. , 2009

Division 2--Other general revenue assistance

9 General purpose financial assistance

(1) The Minister may determine that an amount specified in the

determination is to be paid to a State specified in the determination

for the purpose of making a grant of general purpose financial

assistance to the State.

(2) If the Minister determines an amount under subsection (1):

(a) that amount must be credited to the COAG Reform Fund;

and

(b) the Minister must ensure that, as soon as practicable after the

amount is credited, the COAG Reform Fund is debited for

the purposes of making the grant.

(3) Despite subsection (2), the total amount credited to the COAG

Reform Fund under paragraph (2)(a) must not exceed, and the total

amount covered by drawing rights authorising debits from the

COAG Reform Fund for the purposes of making such grants must

not exceed:

(a) in the financial year starting on 1 July 2008--$500,000,000;

(b) in a later financial year in relation to which an Appropriation

Act relating to that financial year declares that a specified

amount is the general drawing rights limit for the purposes

of this section--that specified amount.

(4) Despite subsections (2) and (3), if no Appropriation Act relating to

a financial year starting after 30 June 2009 declares, in relation to

that financial year, that a specified amount is the general drawing

rights limit for the purposes of this section:

(a) amounts must not be credited to the COAG Reform Fund

under paragraph (2)(a) during that financial year; and

(b) drawing rights must not be issued authorising debits from the

COAG Reform Fund for the purposes of making such grants

in that financial year.

Part 3 National specific purpose payments

Section 10

10 Federal Financial Relations Bill 2009 No. , 2009

Part 3--National specific purpose payments

10 National specific purpose payments for healthcare

(1) Financial assistance is payable in accordance with this section to a

State, for the financial year starting on 1 July 2009 and for each

later financial year, for the purpose of expenditure on healthcare.

(2) The total amount of all financial assistance payable under

subsection (1) to the States for a financial year is:

(a) for the financial year starting on 1 July 2009--

$11,224,185,000; or

(b) for a later financial year--the total amount under this

subsection for the preceding financial year, indexed in

accordance with subsection (3).

(3) The Minister may, by legislative instrument, determine the manner

in which the total amount under paragraph (2)(b) is to be indexed

for a particular financial year. The determination must include a

statement of the total amount for that financial year.

(4) The Minister may, by legislative instrument, determine, for each

financial year, the manner in which the total amount under

subsection (2) is to be divided between the States.

(5) Financial assistance is payable to a State under this section on

condition that the financial assistance is spent on healthcare.

11 National specific purpose payments for schools

(1) Financial assistance is payable in accordance with this section to a

State, for the financial year starting on 1 July 2008 and for each

later financial year, for the purpose of expenditure on schools.

Note:

Financial assistance for non-government schools is provided for under

the Schools Assistance Act 2008.

(2) The total amount of all financial assistance payable under

subsection (1) to the States for a financial year is:

National specific purpose payments Part 3

Section 12

Federal Financial Relations Bill 2009 No. , 2009 11

(a) for the financial year starting on 1 July 2008--the amount

determined by the Minister; or

(b) for the financial year starting on 1 July 2009--

$3,286,594,000; or

subsection for the preceding financial year, indexed in

accordance with subsection (4).

(3) A determination under paragraph (2)(a) is a legislative instrument,

but section 42 (disallowance) of the Legislative Instruments Act

2003 does not apply to the determination.

Note:

The total amount of all financial assistance payable to the States under

subsection (1) of this section and subsections 12(1), 13(1) and 14(1),

for the financial year starting on 1 July 2008, is limited by section 15.

(4) The Minister may, by legislative instrument, determine the manner

in which the total amount under paragraph (2)(c) is to be indexed

for a particular financial year. The determination must include a

statement of the total amount for that financial year.

(5) The Minister may, by legislative instrument, determine, for each

financial year, the manner in which the total amount under

subsection (2) is to be divided between the States.

(6) Financial assistance is payable to a State under this section on

condition that the financial assistance is spent on schools.

12 National specific purpose payments for skills and workforce

development

(1) Financial assistance is payable in accordance with this section to a

State, for the financial year starting on 1 July 2008 and for each

later financial year, for the purpose of expenditure on skills and

workforce development.

(2) The total amount of all financial assistance payable under

subsection (1) to the States for a financial year is:

(a) for the financial year starting on 1 July 2008--the amount

determined by the Minister; or

(b) for the financial year starting on 1 July 2009--

$1,317,877,000; or

Part 3 National specific purpose payments

Section 13

12 Federal Financial Relations Bill 2009 No. , 2009

subsection for the preceding financial year, indexed in

accordance with subsection (4).

(3) A determination under paragraph (2)(a) is a legislative instrument,

but section 42 (disallowance) of the Legislative Instruments Act

2003 does not apply to the determination.

Note:

The total amount of all financial assistance payable to the States under

subsection (1) of this section and subsections 11(1), 13(1) and 14(1),

for the financial year starting on 1 July 2008, is limited by section 15.

(4) The Minister may, by legislative instrument, determine the manner

in which the total amount under paragraph (2)(c) is to be indexed

for a particular financial year. The determination must include a

statement of the total amount for that financial year.

(5) The Minister may, by legislative instrument, determine, for each

financial year, the manner in which the total amount under

subsection (2) is to be divided between the States.

(6) Financial assistance is payable to a State under this section on

condition that the financial assistance is spent on skills and

workforce development.

13 National specific purpose payments for disability services

(1) Financial assistance is payable in accordance with this section to a

State, for the financial year starting on 1 July 2008 and for each

later financial year, for the purpose of expenditure on disability

services.

(2) The total amount of all financial assistance payable under

subsection (1) to the States for a financial year is:

(a) for the financial year starting on 1 July 2008--the amount

determined by the Minister; or

(b) for the financial year starting on 1 July 2009--$903,686,000;

subsection for the preceding financial year, indexed in

accordance with subsection (4).

National specific purpose payments Part 3

Section 14

Federal Financial Relations Bill 2009 No. , 2009 13

(3) A determination under paragraph (2)(a) is a legislative instrument,

but section 42 (disallowance) of the Legislative Instruments Act

2003 does not apply to the determination.

Note:

The amount of all financial assistance payable to the States under

subsection (1) of this section and subsections 11(1), 12(1) and 14(1),

for the financial year starting on 1 July 2008, is limited by section 15.

(4) The Minister may, by legislative instrument, determine the manner

in which the total amount under paragraph (2)(c) is to be indexed

for a particular financial year. The determination must include a

statement of the total amount for that financial year.

(5) The Minister may, by legislative instrument, determine, for each

financial year, the manner in which the total amount under

subsection (2) is to be divided between the States.

(6) Financial assistance is payable to a State under this section on

condition that the financial assistance is spent on disability

services.

14 National specific purpose payments for housing services

(1) Financial assistance is payable in accordance with this section to a

State, for the financial year starting on 1 July 2008 and for each

later financial year, for the purpose of expenditure on housing

services.

(2) The total amount of all financial assistance payable under

subsection (1) to the States for a financial year is:

(a) for the financial year starting on 1 July 2008--the amount

determined by the Minister; or

(b) for the financial year starting on 1 July 2009--

$1,202,590,000; or

subsection for the preceding financial year, indexed in

accordance with subsection (4).

(3) A determination under paragraph (2)(a) is a legislative instrument,

but section 42 (disallowance) of the Legislative Instruments Act

2003 does not apply to the determination.

Part 3 National specific purpose payments

Section 15

14 Federal Financial Relations Bill 2009 No. , 2009

Note:

The total amount of all financial assistance payable to the States under

subsection (1) of this section and subsections 11(1), 12(1) and 13(1),

for the financial year starting on 1 July 2008, is limited by section 15.

(4) The Minister may, by legislative instrument, determine the manner

in which the total amount under paragraph (2)(c) is to be indexed

for a particular financial year. The determination must include a

statement of the total amount for that financial year.

(5) The Minister may, by legislative instrument, determine, for each

financial year, the manner in which the total amount under

subsection (2) is to be divided between the States.

(6) Financial assistance is payable to a State under this section on

condition that the financial assistance is spent on housing services.

15 Total amount of financial assistance for the 2008-2009 financial

year

The total amount of all financial assistance payable under

subsections 11(1), 12(1), 13(1) and 14(1), for the financial year

starting on 1 July 2008, must not exceed $4,000,000,000.

National partnership payments Part 4

Section 16

Federal Financial Relations Bill 2009 No. , 2009 15

Part 4--National partnership payments

16 National partnership payments

(1) The Minister may determine that an amount specified in the

determination is to be paid to a State specified in the determination

for the purpose of making a grant of financial assistance to:

(a) support the delivery by the State of specified outputs or

projects; or

(b) facilitate reforms by the State; or

(2) If the Minister determines an amount under subsection (1):

(a) that amount must be credited to the COAG Reform Fund;

and

(b) the Minister must ensure that, as soon as practicable after the

amount is credited, the COAG Reform Fund is debited for

the purposes of making the grant.

(3) Despite subsection (2), the total amount credited to the COAG

Reform Fund under paragraph (2)(a) must not exceed, and the total

amount covered by drawing rights authorising debits from the

COAG Reform Fund for the purposes of making such grants must

not exceed:

(a) in the financial year starting on 1 July 2008--

$8,000,000,000; or

(b) in a later financial year in relation to which an Appropriation

Act relating to that financial year declares that a specified

amount is the general drawing rights limit for the purposes

of this section--that specified amount.

(4) Despite subsections (2) and (3), if no Appropriation Act relating to

a financial year starting after 30 June 2009 declares, in relation to

that financial year, that a specified amount is the general drawing

rights limit for the purposes of this section:

(a) amounts must not be credited to the COAG Reform Fund

under paragraph (2)(a) during that financial year; and

Payment of g rants Part 5

Section 17

Federal Financial Relations Bill 2009 No. , 2009 17

Part 5--Payment of grants

17 Advance payments for financial year

The Minister may make advances to a State of portions of the

amount or amounts to which, it appears to the Minister, the State

will be entitled under:

(a) section 5; or

(b) a provision of Part 3;

for a financial year.

18 Overpayment or underpayme nt of grant

(1) If a State has been paid an amount in excess of the amount that,

under:

(a) section 5; or

(b) a provision of Part 3;

it was entitled to receive by way of financial assistance for a

financial year, the Minister must deduct an amount equal to the

excess from any amount that the State is entitled to receive by way

of financial assistance under that provision for the first practicable

subsequent financial year.

(2) If a State has been paid less than the amount that, under:

(a) section 5; or

(b) a provision of Part 3;

it was entitled to receive by way of financial assistance for a

financial year, the Minister must add an amount equal to the

shortfall to any amount that the State is entitled to receive by way

of financial assistance under that provision for the first practicable

subsequent financial year.

Part 5 Pay ment of grants

Section 19

18 Federal Financial Relations Bill 2009 No. , 2009

19 Minister may fix amounts, and times of payments, of financial

assistance

(1) Financial assistance payable to a State under this Act is to be paid

in such amounts, and at such times, as the Minister determines in

writing.

(2) A determination made under subsection (1) is not a legislative

instrument.

20 Repayment if condition not fulfilled

(1) It is a condition of a payment of financial assistance under this Act

to a State that, if the State does not fulfil a condition in respect of

the payment, the State will, if the Minister so determines, repay to

the Commonwealth the amount stated in the determination.

(2) The amount stated in the determination under subsection (1) must

not be more than the amount of the payment.

(3) A determination made under subsection (1) is not a legislative

instrument.

(4) If:

(a) a payment of financial assistance has, during a financial year,

been made to a State under this Act; and

(b) the Minister has determined under subsection (1) that the

State must repay an amount in respect of the payment; and

the Minister may deduct an amount equal to the amount unpaid

from any amount that the State is entitled to receive by way of

financial assistance under this Act for a subsequent financial year.

(5) An amount payable by a State to the Commonwealth under this

Act is a debt due by the State to the Commonwealth.

Miscellaneous Part 6

Section 21

Federal Financial Relations Bill 2009 No. , 2009 19

Part 6--Miscellaneous

21 Minister to have regard to Intergove rnme ntal Agreement and

other agreements

In making a determination under this Act, the Minister must have

regard to:

(a) the Intergovernmental Agreement; and

(b) if the determination relates to financial assistance to a

particular State--any other written agreement between the

Commonwealth and the State that relates to the financial

assistance.

22 Appropriation

Payments under Division 1 of Part 2, Part 3 or Part 5 are to be

made out of the Consolidated Revenue Fund, which is appropriated

accordingly.

23 Delegation

(1) The Minister may, by writing, delegate any or all of his or her

powers under section 17 or 19 to an SES employee, or acting SES

employee, in the Department.

Note:

The expressions SES employee and acting SES employee are defined

in section 17AA of the Acts Interpretation Act 1901.

(2) In exercising powers under a delegation, the delegate must comply

with any directions of the Minister.

24 Regulations

The Governor-General may make regulations prescribing matters:

(a) required or permitted by this Act to be prescribed; or

(b) necessary or convenient to be prescribed for carrying out or

giving effect to this Act.

Commonwealth of Australia Bills

FEDERAL FINANCIAL RELATIONS BILL 2009