COAG and Federal financial relations: reform of the Federation White Paper issues paper 5
This issues paper examines the arrangements and institutions underpinning Australia’s Federation, including the Council of Australian Governments (COAG) and financial arrangements between the Commonwealth and the States and Territories. It asks questions to prompt discussion on possible options for reform.
On 10 October 2014, the Council of Australian Governments (COAG):
... acknowledged the importance of the federal system to Australia’s success as a nation. It supported a collegial approach to reviewing current arrangements with a view to reducing overlap and duplication in roles and responsibilities between governments and working together better in areas of shared responsibilities. COAG agreed that clearer lines of reporting and accountability to the public should result in better education, health and other social and economic outcomes for Australians and more efficient and lower cost service delivery ... whilst this could involve significant reform in some areas, it would ensure taxpayer funds are better targeted and they deliver better results for the Australian people. 1
For over a century Australia’s Federation has worked well and delivered stability and economic prosperity. However, a significant proportion of Australians do not believe our current system of government works well. Increasing overlap between the roles and responsibilities of all levels of government over recent decades has undermined the efficiency and effectiveness of our Federation.2 Hence, the Prime Minister and the Premiers and Chief Ministers have agreed that the Reform of the Federation White Paper should focus firmly on clarifying roles and responsibilities between different spheres of government and the need for all levels of government to coordinate action to ensure the best possible results for citizens.
Any reform in this area has to lead to an improvement in how governments perform for their citizens. A reallocation of roles and responsibilities that is no more than a bureaucratic tidy-up will be a waste of time, effort and resources. Reform of the Federation must deliver concrete improvements in the way services are delivered.
This issues paper examines two aspects of Australia’s intergovernmental structure that are the essential building blocks of a Federation that delivers for citizens: the institutional framework in which intergovernmental relations are conducted; and the federal fiscal system supporting it.