Federation has served Australia well for 119 years. However our world is changing. Like all organisations, governments must continue to make sure that their processes and responsibilities are fit for purpose. It is timely to review our federal financial relations as it enables the effective working of our federation.
When the NSW Review of Federal Financial Relations (the Review) commenced, the State’s finances were in a healthy shape, supported by a period of solid economic growth and a record pipeline of infrastructure investment.
Two catastrophic and unforeseeable challenges have brought those challenges forward to today. Firstly, the devastating summer of bushfires illustrated our national vulnerability and the importance of integrated leadership from state and Commonwealth government. Secondly, the coronavirus (COVID-19) pandemic has brought the greatest economic, financial and social shock since the Second World War, leaving a major economic crisis that will burden our societies for years, if not decades, to come.
Some of the Review’s recommendations involve the Commonwealth. This is necessary to make the tax system as a whole simpler and more efficient, streamline financial relations with the states, and ensure that Commonwealth funding supports, rather than inhibits, efforts to achieve economic recovery.