Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
COAG REFORM FUND BILL 2008
REVISED EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Treasurer, the Hon Wayne Swan MP)
THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY
THE HOUSE OF REPRESENTATIVES
TO THE BILL AS INTRODUCED
Table of contents
Glossary 1
General outline and financial impact 3
Chapter 1 The COAG Reform Fund Bill 5
Chapter 2 Government Amendment of the COAG Reform Fund Bill 9
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The following abbreviations and acronyms are used throughout this
explanatory memorandum.
|Abbreviation |Definition |
|BAF |Building Australia Fund |
|COAG |Council of Australian |
| |Governments |
|EIF |Education Investment Fund |
|HHF |Health and Hospitals Fund |
|SES |Senior Executive Service |
General outline and financial impact
Establishment of the COAG Reform Fund
This Bill establishes the COAG Reform Fund as a Special Account.
The purpose of the COAG Reform Fund is the making of grants of
financial assistance to the States and Territories. The terms and
conditions on which financial assistance is granted are to be set
out in written agreements between the Commonwealth and States or
Territories.
Date of effect: This measure takes effect 1 January 2009
Proposal announced: This measure was announced in the Commonwealth
2008-09 Budget.
Financial impact: nil
Compliance cost impact: nil.
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Outline of chapter
1. This Bill establishes the COAG Reform Fund for the purpose of
making grants of financial assistance to the States and
Territories.
2. The Bill also provides that the terms and conditions on which
financial assistance is to be granted are to be set out in written
agreements between the Commonwealth and States or Territories.
Context of new law
3. On 26 March 2008, the Council of Australian Governments (COAG)
agreed to a new framework for federal financial relations.
4. A central element of the new framework is the provision of new
incentive payments to drive reforms. The Commonwealth will provide
National Partnership payments to the States to support the delivery
of specific projects, to facilitate reforms or to reward those
jurisdictions that deliver nationally significant reforms.
5. On 13 May 2008, as part of the 2008-09 Budget the Government
announced that it would establish three new nation-building funds -
the Building Australia Fund (BAF), Education Investment Fund (EIF)
and the Health and Hospitals Fund (HHF) (the nation-building funds)
- as well as a COAG Reform Fund to channel payments from the nation
building funds to the States via National Partnership payments.
6. The COAG Reform Fund will channel National Partnership reform
payments from the Commonwealth Budget annual appropriations; and
payments from the nation-building funds.
- The purpose of the nation-building funds is to lift
Australia's productive capacity by providing leadership
in the planning, financing and provision of significant
national infrastructure projects.
Summary of new law
7. This Bill establishes the COAG Reform Fund as a Special Account as
provided for in section 21 of the Financial Management and
Accountability Act 1997.
8. The COAG Reform Fund may receive funding through:
. payments from the nation-building funds;
. annual Appropriation Acts; and/or
. special appropriations in the form of National Partnership
payments.
9. The COAG Reform Fund provides a vehicle for the disbursement of
grants of financial assistance to a State or Territory, for the
purposes of:
. supporting the delivery of specified outputs or projects
through appropriations from the nation-building funds;
. facilitating the implementation of nationally significant
reforms and rewarding jurisdictions that deliver
nationally significant reforms through National
Partnership payments.
10. Financial assistance to a State or Territory will be subject to an
agreement between the Commonwealth and the State or Territory (a
National Partnership agreement) setting out performance benchmarks
and the amount of the payment for meeting each benchmark.
. For grants through the COAG Reform Fund that originate in
the nation-building funds, terms and conditions of
financial assistance will be those contained in written
agreements under the Nation-building Funds Act 2008.
11. In the case of National Partnership reward payments, financial
assistance to a State or Territory will also be subject to the COAG
Reform Council assessment of whether the performance benchmarks
have been achieved.
Comparison of key features of new law and current law
|New law |Current law |
|A new special account is |Current federal financial|
|created for the purpose |relations are convoluted,|
|of distributing funds to |involving many complex |
|the States and |payment arrangements in |
|Territories. |various areas. No |
| |specific account such as |
| |that proposed by the Bill|
| |currently exists to |
| |channel funds to the |
| |States and Territories. |
Detailed explanation of new law
12. This Bill brings into existence the COAG Reform Fund and specifies
that it is a Special Account for the purposes of the Financial
Management and Accountability Act 1997. [Section 5]
13. For the purposes of section 21 of the Financial Management and
Accountability Act 1997, the purpose of the COAG Reform Fund is the
making of grants of financial assistance to the States and
Territories. [Section 6]
14. The Bill requires that the terms and conditions on which financial
assistance is granted through the COAG Reform Fund are set out in a
written agreement between the Commonwealth and the State or
Territory. [Sub-sections 7(1) and 7(2)]
15. The Bill provides that an agreement relating to funding for a State
or Territory may be entered into by a Minister on behalf of the
Commonwealth. [Sub-section 7(3)]
16. The Bill also provides that a Minister may delegate the authority
to enter into an agreement to the Secretary of a Department or to
an SES employee, or acting SES employee, in a Department. A
delegate exercising the powers of the Minister must comply with any
directions of the Minister. [Section 8]
Application and transitional provisions
17. This Bill will apply from 1 January 2009.
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Government Amendment
18. A government amendment of the Bill (introduced in the House of
Representatives on 23 October 2008) was agreed to by the House of
Representatives on 1 December 2008.
19. The government amendment was required in order for the Bill to
capture the full scope of the purposes of the Nation-building Funds
Bill 2008 (introduced in the House of Representatives on 13
November 2008).
20. The government amendment stated:
Clause 7, page 4 (lines 12 to 15), omit subparagraphs (1)(b)(i) to
(iv), substitute:
(i) subsection 92(2);
(ii) subsection 97(2);
(iii) subsection 102(2);
(iv) subsection 107(2);
(v) subsection 197(2);
(vi) subsection 265(2).
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