State Orange Book 2018: policy priorities for states and territories

State governments Policy Economics Taxation Primary health care Australia

Election season is looming. Voters in Victoria go to the polls within weeks; in NSW within months. These elections are an opportunity to take stock of how Australia’s states are doing, where they are going, and what state governments can do about it.

This report surveys policy recommendations from ten years of Grattan Institute reports and outlines what the policy priorities should be, not only for the governments in Australia’s two biggest states, but state governments across the nation.

The problems aren’t hard to find. Per capita income has been flat for five years as the mining boom subsided. State governments continue to announce large infrastructure projects without doing enough homework beforehand. Home ownership is falling fast among the young and the poor, those on low incomes are spending more on housing, and homelessness is rising, particularly in NSW. Our schools are not keeping up with the best in the world. In most states, people are waiting longer for medical treatments. Wholesale electricity prices have increased significantly over the past few years while Australia is not on target to reach its emissions commitments.

Many worthwhile reforms have been implemented over the past decade. Victoria’s hospitals cost less per patient and contribute more to better health outcomes than elsewhere. Queensland’s school students learn more in Years 3–5, and this has improved significantly in the past few years. Western Australian school outcomes have improved in many areas. The ACT has started to replace inefficient stamp duties with a much more efficient broad-based property tax. NSW has used the good times to improve its budget position. NSW, Victoria, South Australia and the ACT have all increased the transparency of political decision-making and tightened controls over money in politics.

But every state could learn from the others and do better.

State governments – particularly NSW and Victoria – face population pressures. They should resist political pressure to wind back planning reforms that have helped to increase housing supply, and instead should go further to ensure enough housing is built, particularly in established suburbs, to accommodate rapidly growing populations. NSW and Victoria should commission work to enable the introduction of time-of-day road and public transport pricing to manage congestion in Sydney and Melbourne. All states should stop announcing transport projects before they have been analysed rigorously, and they should evaluate completed projects properly.

There are other important priorities for economic reform. All states should follow the lead of the ACT and replace stamp duties with broad-based property taxes. States should reform electricity markets to encourage reliability and reduce emissions – whether or not the Commonwealth cooperates.

States could deliver services better. Other states should follow Victoria’s lead and reduce the overall cost and the variation in cost between public hospitals. And they should develop more prevention programs to reduce the disparity between regional and urban health outcomes. States should lift progress for all school students by identifying and spreading good teaching practices at the same time as strengthening the evidence base. They should also invest more in early learning for the most disadvantaged students.

Institutional reforms are needed as well. States need more visibility of their long-term budget positions. While institutional accountability is improving in many states, Western Australia, Tasmania and the Northern Territory need to limit election spending, and make political donations and lobbying more transparent.

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