Cooperation with other jurisdictions, including payments to states

The Commonwealth works cooperatively with other jurisdictions including the States and Territories (the States) and local government.  There are already many arrangements for cooperation between Commonwealth entities and State or local entities or bodies.  Cooperation may be formal or informal in nature and may be ongoing or short term. These arrangements with other jurisdictions may or may not have financial Implications.

Arrangements with other jurisdictions that have a financial impact must comply with relevant legislative requirements.  Payments to the States are subject to the PGPA Act, the Federal Financial Relations Act 2009 and the COAG Reform Fund Act 2008 (where relevant).  Payments to the States are also made in accordance with the federal financial relations framework, as set out in the Intergovernmental Agreement on Federal Financial Relations (IGA) external link. Further information is available on the Council for Federal Financial Relations website External link

For proposed new payments, Commonwealth portfolio entities must consult with the Budget Estimates and Accounting Branch in Finance (cope@finance.gov.au) for advice on whether an Australian Government payment is classified as a Commonwealth Own-Purpose Expense or a payment to or through the States or direct to local government. Commonwealth portfolio entities should consider relevant programme information against the criteria of contestability and the nature of transactions as described in RMG 419 Classification of Payments to other levels of government for specific purposes and Commonwealth Own-Purpose Expenses

Given the importance of classification to the management of payments, an agreement under the federal financial relations framework must not be drafted or negotiated before the classification of any proposed payment is verified by Finance.  Where a payment is classified as to or through the States, Commonwealth portfolio entities must consult the Commonwealth-State Relations Branch of the Department of the Prime Minister and Cabinet, and the Commonwealth-State Relations Division of the Treasury on the drafting of any agreement.  Further guidance on these processes is provided in Federal Finances Circular 2011/03, Processes for Drafting, Negotiating, Finalising and Varying Agreements under the federal financial relations framework, and related Estimates and Payments processes [external link PDF].

While the Treasurer is accountable for the appropriations for, and the efficient payment of, payments to the States, including through the COAG Reform Fund, the relevant Commonwealth minister and entity remain responsible for ensuring that all necessary policy and budget authority exists, and that all relevant legislative approvals under the PGPA Act are in place. Accountabilities under the federal financial relations framework are set out in the Short Guide to the IGA [external link PDF].

Contact for information on this page: pmra@finance.gov.au

Last updated: 15 June 2015