An Act to provide financial assistance to the States, the Australian Capital Territory and the Northern Territory, and for related purposes
Part 1—Preliminary
1 Short title
This Act may be cited as the Federal Financial Relations Act 2009.
2 Commencement
This Act commences on 1 April 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
(ba) national health reform payments, to be spent by the States in accordance with the National Health Reform Agreement; and
(bb) payments relating to:
(i) housing; and
(ii) homelessness; and
(iii) housing affordability matters;
to be spent by the States in accordance with:
(iv) a primary housing agreement and a supplementary housing agreement; or
(v) a designated housing agreement; and
(c) national partnership payments, to:
(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.
designated housing agreement means an agreement that:
(a) is entered into between the Commonwealth and one or more States; and
(b) relates to any or all of the following:
(i) housing;
(ii) homelessness;
(iii) housing affordability matters; and
(c) is expressed to be a designated housing agreement for the purposes of this Act; and
(d) is entered into before or after the commencement of Part 3B.
estimated population of a State has the meaning given by section 7.
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:
(a) the A New Tax System (Goods and Services Tax Imposition—Customs) Act 1999;
(b) the A New Tax System (Goods and Services Tax Imposition—Excise) Act 1999;
(c) the A New Tax System (Goods and Services Tax Imposition—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.
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.
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.
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:
(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).
pool top‑up has the meaning given by section 8A.
primary housing agreement means an agreement that:
(a) is entered into between the Commonwealth and one or more States; and
(b) relates to any or all of the following:
(i) housing;
(ii) homelessness;
(iii) housing affordability matters; and
(c) is expressed to be a primary housing agreement for the purposes of this Act; and
(d) is entered into before or after the commencement of Part 3B.
second indexation amount has the meaning given by subsections 8A(4) and (5).
State includes the Australian Capital Territory and the Northern Territory.
supplementary housing agreement means an agreement that:
(a) is entered into between the Commonwealth and a single State; and
(b) relates to any or all of the following:
(i) housing;
(ii) homelessness;
(iii) housing affordability matters; and
(c) relates to:
(i) a single financial year; or
(ii) each of 2 consecutive financial years; or
(iii) each of 3 consecutive financial years; or
(iv) each of 4 consecutive financial years; or
(v) each of 5 consecutive financial years; and
(d) is expressed to be a supplementary housing agreement for the purposes of this Act; and
(e) is entered into before or after the commencement of Part 3B.
wine equalisation tax law has the meaning given by section 33‑1 of the A New Tax System (Wine Equalisation Tax) Act 1999.
Part 2—General revenue assistance
Division 1—GST revenue grants
5 GST revenue grants
(1) 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
(2) 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.
(3) If the sum of:
(a) the amount of the grant to which a State is entitled under subsection (1) for a transitional year (the base year); and
(b) 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
(c) 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.
(4) The Minister must, in forming an opinion under subsection (3):
(a) consult with each of the States; and
(b) have regard to any report of the Commonwealth Grants Commission that the Minister considers relevant.
6 GST revenue
(1) The Minister must, by notifiable instrument, determine the amounts described in subsections (3) and (4) for a payment year.
(2) The GST revenue for a payment year is the difference between:
(a) the sum of all the amounts described in subsection (3) and determined for the payment year; and
(b) the amount described in subsection (4) and determined for the payment year.
(3) For the purposes of paragraph (2)(a) the amounts are:
(a) the amount that is the total of the following:
(i) the GST that was collected;
(ii) 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;
(iii) 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
(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 payable in respect of unpaid GST; and
(c) 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) 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:
(a) payments under the GST refund provisions;
(b) 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.
(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.
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.
(2A) 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.
(2B) 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.
(3) A determination under subsection (1) is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the determination.
8A Pool top‑up for a payment year
(1) 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 |
(2) The first indexation amount for a payment year (the current year) is the greater of:
(a) the amount worked out using the formula in subsection (3); and
(b) 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
(c) otherwise—$0.
(3) 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.
(4) The second indexation amount for a payment year (the current year) is the greater of:
(a) the amount worked out using the formula in subsection (5); and
(b) 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
(c) otherwise—$0.
(5) 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.
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), 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:
(a) the total amount credited to the COAG Reform Fund under paragraph (2)(a) during the financial year; and
(b) the total amount debited from the COAG Reform Fund during the financial year for the purposes of making such grants;
must not exceed that specified amount.
(4) 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:
(a) amounts must not be credited to the COAG Reform Fund under paragraph (2)(a) during the financial year; and
(b) amounts must not be debited from the COAG Reform Fund during the financial year for the purposes of making such grants.
(5) A determination under subsection (1) is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the determination.
Part 3—National specific purpose payments
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
(c) for a later financial year—the total amount under this 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 Legislation Act 2003 does not apply to the determination.
(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; or
(c) for a later financial year—the total amount under this subsection for the preceding financial year, adjusted in accordance with subsection (4).
(3) 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.
(4) 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.
(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.
Part 3A—National health reform payments
15A National health reform 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 for the purpose of expenditure in accordance with the National Health Reform Agreement.
(2) A determination under subsection (1) is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the determination.
(3) Financial assistance is payable to a State under this section on condition that the financial assistance is spent in accordance with the National Health Reform Agreement.
Part 3B—Payments relating to housing, homelessness and housing affordability matters
15B Simplified outline of this Part
• Payments relating to housing, homelessness and housing affordability matters may be made to a State if the State is a party to:
(a) a primary housing agreement; and
(b) a supplementary housing agreement.
• Payments relating to housing, homelessness and housing affordability matters may be made to a State if the State is a party to a designated housing agreement.
15C Payments relating to housing, homelessness and housing affordability matters—primary housing agreement and supplementary housing agreement
Scope
(1) This section applies to a State in relation to a financial year if the State is a party to:
(a) a primary housing agreement; and
(b) a supplementary housing agreement that relates to the financial year.
Determination
(2) 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:
(a) the primary housing agreement; and
(b) the supplementary housing agreement.
(3) 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
(4) 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:
(a) the primary housing agreement; and
(b) the supplementary housing agreement.
(5) Financial assistance is payable to the State under this section for the financial year on condition that, at all times during the period ascertained in accordance with the primary housing agreement or the supplementary housing agreement, the State will:
(a) have a housing strategy for the State that:
(i) indicates the level of housing supply needed to respond to projected housing demand, and outlines the reforms and initiatives that contribute to meeting this need; and
(ii) includes such other matters (if any) as are specified in the primary housing agreement or the supplementary housing agreement; and
(b) so far as is reasonably practicable to do so—make the housing strategy available on a publicly accessible website.
(6) Financial assistance is payable to the State under this section for the financial year on condition that, at all times during the period ascertained in accordance with the primary housing agreement or the supplementary housing agreement, the State will:
(a) have a homelessness strategy for the State that:
(i) addresses the priority homelessness cohorts identified in the primary housing agreement; and
(ii) includes reforms or initiatives that contribute to a reduction in the incidence of homelessness; and
(iii) includes such other matters (if any) as are specified in the primary housing agreement or the supplementary housing agreement; and
(b) so far as is reasonably practicable to do so—make the homelessness strategy available on a publicly accessible website.
(7) Financial assistance is payable to the State under this section for the financial year on condition that, for each $1 paid to the State under this section for the financial year in relation to homelessness, the State will spend during the financial year, out of its own resources, $1 in relation to homelessness.
(8) Financial assistance is payable to the State under this section for the financial year on condition that the State will:
(a) give the Minister such information (if any) relating to any or all of the following:
(i) housing;
(ii) homelessness;
(iii) housing affordability matters;
as is specified in the primary housing agreement or the supplementary housing agreement; and
(b) do so in the manner, and within the period, ascertained in accordance with the primary housing agreement or the supplementary housing agreement, as the case requires.
(9) The following are matters for the State:
(a) the accuracy (or likely accuracy) of the level of housing supply indicated in the housing strategy mentioned in subsection (5);
(b) the quality or effectiveness (or likely quality or effectiveness) of the reforms and initiatives included in that housing strategy;
(c) the quality or effectiveness (or likely quality or effectiveness) of the reforms or initiatives included in the homelessness strategy mentioned in subsection (6).
15D Payments relating to housing, homelessness and housing affordability matters—designated housing agreement
(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 for the purpose of expenditure in accordance with a designated housing agreement to which the State is a party.
(2) A determination under subsection (1) is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the determination.
(3) Financial assistance is payable to a State under this section on condition that the financial assistance is spent in accordance with the designated housing agreement.
(4) Financial assistance payable to a State under this section is subject to such additional terms and conditions (if any) as are set out in the designated housing agreement.
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
(c) reward the State for nationally significant reforms.
(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), 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:
(a) the total amount credited to the COAG Reform Fund under paragraph (2)(a) during the financial year; and
(b) the total amount debited from the COAG Reform Fund during the financial year for the purposes of making such grants;
must not exceed that specified amount.
(4) 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:
(a) amounts must not be credited to the COAG Reform Fund under paragraph (2)(a) during the financial year; and
(b) amounts must not be debited from the COAG Reform Fund during the financial year for the purposes of making such grants.
(5) A determination under subsection (1) is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the determination.
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, 3A or 3B;
for a financial year.
18 Overpayment or underpayment 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, 3A or 3B;
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, 3A or 3B;
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.
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
(c) the State has not repaid the amount;
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.
Part 6—Miscellaneous
21 Minister to have regard to Intergovernmental Agreement and other agreements
In making a determination under this Act, the Minister must have regard to:
(a) the Intergovernmental Agreement; and
(aa) if the determination relates to financial assistance under section 13 or 15A—the National Health Reform Agreement; and
(ab) if:
(i) the determination relates to financial assistance to a State under section 15C; and
(ii) the State is a party to a primary housing agreement or a supplementary housing agreement;
the primary housing agreement or the supplementary housing agreement, as the case may be; and
(ac) if:
(i) the determination relates to financial assistance to a State under section 15D; and
(ii) the State is a party to a designated housing agreement;
the designated housing agreement; and
(b) if the determination relates to financial assistance to one or more States—any other written agreement between the Commonwealth and one or more States that relates to that financial assistance.
22 Appropriation
Payments under Division 1 of Part 2, Part 3, Part 3A, Part 3B 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 2B 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.