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 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.

With economic recovery now a priority, the question facing the review is how state governments can provide taxpayers with reliable, quality government services, while keeping the taxes they pay as low as possible. To do this, we need to identify practical ways to maximise the value we get per dollar of tax raised. We need to make taxes as simple as possible, and limit the impact they have upon citizens’ lives, such as the decision about when to move house and whether to insure.

The review received significant evidence about the sustainability of funding required for essential state services over the longer-term. Evidence points to a large backlog of infrastructure maintenance and ongoing pressures on our health system and other frontline services. Data also suggests the states’ largest revenue source – the Goods and Services Tax (GST) – is a shrinking tax base.