1Short title
This Act may be cited as the Federal Financial Relations Act 2009.
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Bill homepage (APH)This Act may be cited as the Federal Financial Relations Act 2009.
This Act commences on 1 April 2009.
The main object of this Act is to provide ongoing financial support for the delivery of services by the States, through:
general revenue assistance, including the provision of GST revenue grants, to be used by the States for any purpose; and
payments to be spent by the States in accordance with a skills and workforce development agreement; and
national specific purpose payments, to be spent by the States on certain service delivery sectors; and
national health reform payments, to be spent by the States in accordance with the National Health Reform Agreement; and
payments relating to:
housing; and
homelessness; and
housing affordability matters;
to be spent by the States in accordance with:
a primary housing agreement and a supplementary housing agreement; or
a designated housing agreement; and
national partnership payments, to:
support the delivery by the States of specified outputs or projects; or
facilitate reforms by the States; or
reward the States for nationally significant reforms.
Another object of this Act is to provide financial support for the delivery by the States of temporary and targeted relief from high energy bills for households and small businesses.
In this Act:
Appropriation Act means an Act appropriating money for expenditure out of the Consolidated Revenue Fund.
designated housing agreement means an agreement that:
is entered into between the Commonwealth and one or more States; and
relates to any or all of the following:
housing;
homelessness;
housing affordability matters; and
is expressed to be a designated housing agreement for the purposes of this Act; and
is entered into before or after the commencement of Part 3B.
estimated population of a State has the meaning given by section 7.
Federation Reform Fund means the Federation Reform Fund established by section 5 of the Federation Reform Fund Act 2008.
first indexation amount has the meaning given by subsections 8A(2) and (3).
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:
the A New Tax System (Goods and Services Tax Imposition—Customs) Act 1999;
the A New Tax System (Goods and Services Tax Imposition—Excise) Act 1999;
the A New Tax System (Goods and Services Tax Imposition—General) Act 1999;
the A New Tax System (Goods and Services Tax Imposition (Recipients)—Customs) Act 2005;
the A New Tax System (Goods and Services Tax Imposition (Recipients)—Excise) Act 2005;
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.
housing affordability matter means a matter that is likely to affect the affordability of housing.
Intergovernmental Agreement means the Intergovernmental Agreement on Federal Financial Relations that took effect on 1 January 2009, as amended from time to time.
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.
National Health Reform Agreement means the National Health Reform Agreement agreed to by the Council of Australian Governments on 2 August 2011, as amended from time to time.
payment year means:
the financial year starting on 1 July 2009; and
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).
pool top‑up has the meaning given by section 8A.
primary housing agreement means an agreement that:
is entered into between the Commonwealth and one or more States; and
relates to any or all of the following:
housing;
homelessness;
housing affordability matters; and
is expressed to be a primary housing agreement for the purposes of this Act; and
is entered into before or after the commencement of Part 3B.
second indexation amount has the meaning given by subsections 8A(4) and (5).
skills and workforce development agreement means:
the National Skills Agreement that was entered into between the Commonwealth and the States and that took effect on 1 January 2024, as amended from time to time; or
if the agreement referred to in paragraph (a) ceases to have effect—an agreement, as amended from time to time, that:
is entered into between the Commonwealth and one or more States; and
relates to skills or workforce development, or both; and
is expressed to be a skills and workforce development agreement for the purposes of this Act; and
is entered into before or after the commencement of this paragraph.
State includes the Australian Capital Territory and the Northern Territory.
supplementary housing agreement means an agreement that:
is entered into between the Commonwealth and a single State; and
relates to any or all of the following:
housing;
homelessness;
housing affordability matters; and
relates to:
a single financial year; or
each of 2 consecutive financial years; or
each of 3 consecutive financial years; or
each of 4 consecutive financial years; or
each of 5 consecutive financial years; and
is expressed to be a supplementary housing agreement for the purposes of this Act; and
is entered into before or after the commencement of Part 3B.
temporary energy bill relief agreement means an agreement that:
is entered into between the Commonwealth and one or more States; and
relates to the delivery by the State or States of temporary relief from high energy bills for households and small businesses; and
provides that the State or States must not deliver that relief to a household or small business unless criteria specified in the agreement in relation to the household or small business are met; and
is expressed to be a temporary energy bill relief agreement for the purposes of this Act; and
is entered into on or after 9 December 2022.
wine equalisation tax law has the meaning given by section 33‑1 of the A New Tax System (Wine Equalisation Tax) Act 1999.
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:
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).
pool top‑up means the pool top‑up for the payment year (see section 8A).
Additional financial assistance for transitional payment years
In this section:
transitional year means the 2021‑22 payment year, the 2022‑23 payment year, the 2023‑24 payment year, the 2024‑25 payment year, the 2025‑26 payment year or the 2026‑27 payment year.
If the sum of:
the amount of the grant to which a State is entitled under subsection (1) for a transitional year (the base year); and
the amount of the grant to which the State is entitled under subsection (1) for each transitional year (if any) before the base year; and
the amount of the grant (if any) to which the State is entitled under this subsection for each transitional year (if any) before the base year;
is less than the sum of the amounts of the grants to which the State would, in the Minister’s opinion, have been entitled for the base year, and each transitional year (if any) before the base year, under this section if the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Act 2018 had not been enacted, the State is entitled, subject to this Act, to the payment, by way of additional financial assistance for the base year, of a grant equal to the difference.
The Minister must, in forming an opinion under subsection (3):
consult with each of the States; and
have regard to any report of the Commonwealth Grants Commission that the Minister considers relevant.
The Minister must, by notifiable instrument, determine the amounts described in subsections (3) and (4) for a payment year.
The GST revenue for a payment year is the difference between:
the sum of all the amounts described in subsection (3) and determined for the payment year; and
the amount described in subsection (4) and determined for the payment year.
For the purposes of paragraph (2)(a) the amounts are:
the amount that is the total of the following:
the GST that was collected;
the payments made to the Commissioner of Taxation representing amounts 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 section 5 of the GST Imposition Acts had not been enacted;
the additional GST that would have been collected if the Commonwealth and Commonwealth entities could be made subject to taxation by a Commonwealth law and section 177‑1 of the GST Act made those entities actually liable rather than notionally liable; and
the amount of general interest charge that was collected to the extent that it is attributable to:
unpaid GST; or
unpaid general interest charge payable in respect of unpaid GST; and
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.
For the purposes of paragraph (2)(b) the amount is the total of the following, so far as each of them is attributable to GST:
payments under the GST refund provisions;
what was payable under the GST refund provisions and was (rather than being paid directly under those provisions) allocated, applied or refunded in accordance with Part IIB of the Taxation Administration Act 1953.
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.
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.
The Minister may determine that a factor specified in the determination is the GST revenue sharing relativity for a State for a payment year.
Before making a determination under subsection (1), the Minister must consult each of the States.
A factor determined under subsection (1) for a State for the 2022‑23 payment year or the 2023‑24 payment year must be greater than or equal to 0.7.
A factor determined under subsection (1) for a State for the 2024‑25 payment year or a later payment year must be greater than or equal to 0.75.
A determination under subsection (1) is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the determination.
The pool top‑up for a payment year is worked out using this table:
Pool top‑up for a payment year | ||
|---|---|---|
Item | For this payment year: | The pool top‑up is: |
1 | the 2020‑21 payment year or an earlier payment year | $0 |
2 | the 2021‑22 payment year | $600 million |
3 | the 2022‑23 payment year | the sum of: (a) $600 million; and (b) the first indexation amount for that payment year |
4 | the 2023‑24 payment year | the sum of: (a) $600 million; and (b) the first indexation amount for that payment year |
5 | the 2024‑25 payment year | the sum of: (a) $850 million; and (b) the first indexation amount for that payment year |
6 | the 2025‑26 payment year or a later payment year | the sum of: (a) $850 million; and (b) the first indexation amount for that payment year; and (c) the second indexation amount for that payment year |
The first indexation amount for a payment year (the current year) is the greater of:
the amount worked out using the formula in subsection (3); and
if the current year is the 2023‑24 payment year or a later payment year—the first indexation amount for the last payment year before the current year; and
otherwise—$0.
The formula for paragraph (2)(a) is:
where:
GST revenue for current year is the GST revenue for the current year.
GST revenue for 2021‑22 is the GST revenue for the 2021‑22 payment year.
The second indexation amount for a payment year (the current year) is the greater of:
the amount worked out using the formula in subsection (5); and
if the current year is the 2026‑27 payment year or a later payment year—the second indexation amount for the last payment year before the current year; and
otherwise—$0.
The formula for paragraph (4)(a) is:
where:
GST revenue for current year is the GST revenue for the current year.
GST revenue for 2024‑25 is the GST revenue for the 2024‑25 payment year.
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.
If the Minister determines an amount under subsection (1):
that amount must be credited to the Federation Reform Fund; and
the Minister must ensure that, as soon as practicable after the amount is credited, the Federation Reform Fund is debited for the purposes of making the grant.
Despite subsection (2), if an Appropriation Act relating to a financial year declares that a specified amount is the debit limit for the financial year for the purposes of this section:
the total amount credited to the Federation Reform Fund under paragraph (2)(a) during the financial year; and
the total amount debited from the Federation Reform Fund during the financial year for the purposes of making such grants;
must not exceed that specified amount.
Despite subsection (2), if, for a financial year, no Appropriation Act relating to the financial year declares that a specified amount is the debit limit for the financial year for the purposes of this section:
amounts must not be credited to the Federation Reform Fund under paragraph (2)(a) during the financial year; and
amounts must not be debited from the Federation Reform Fund during the financial year for the purposes of making such grants.
A determination under subsection (1) is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the determination.
Scope
This section applies to a State in relation to a financial year if:
the State is a party to a skills and workforce development agreement; and
the financial year is the 2024‑25 financial year or a later financial year.
Determination
The Minister may determine that an amount specified in the determination is to be paid to the State for the purpose of making a grant of financial assistance for the financial year for the purpose of expenditure in accordance with the skills and workforce development agreement.
A determination under subsection (2) is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the determination.
Terms and conditions
Financial assistance is payable to the State under this section for the financial year on condition that the financial assistance is spent in accordance with the skills and workforce development agreement.
Financial assistance payable to the State under this section is subject to such additional terms and conditions (if any) as are set out in the skills and workforce development agreement.
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.
The total amount of all financial assistance payable under subsection (1) to the States for a financial year is:
for the financial year starting on 1 July 2008—the amount determined by the Minister; or
for the financial year starting on 1 July 2009—$903,686,000; or
for a later financial year—the total amount under this subsection for the preceding financial year, adjusted in accordance with subsection (4).
A determination under paragraph (2)(a) is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the determination.
The Minister may, by legislative instrument, determine the manner in which the total amount under paragraph (2)(c) is to be adjusted for a particular financial year. The determination must include a statement of the total amount for that financial year.
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.
Financial assistance is payable to a State under this section on condition that the financial assistance is spent on disability services.
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