Federation talk: premiers soothed, white papers to progress

By Harley Dennett

October 13, 2014

Amid tension and blowback against the Commonwealth over abandoned Gonski and health partnership agreements, the federalism and tax reform white papers are back on track.

State premiers bristled over the broken agreements — costing the states upwards of $80 billion — but agreed to focus on the white paper process during an all-smiles media event following the Council of Australian Governments meeting on Friday.

The federal budget, released days after COAG agreed to the white paper path, was seen as a betrayal to state premiers who had faith that partnership agreements, tying up significant state resources and planning, would continue under the Abbott government. They had, after all, just agreed to a white paper process that was supposed to allow time for consultation on the future of those agreements.

Over a breakfast with Prime Minister Tony Abbott on Friday, the states agreed to give him another chance. At the media conference Abbott reassured the premiers that consultation would improve as the white paper progresses:

“What we have agreed on is a white paper process going forward. I know that there was a lot of reaction to some elements of the recent budget and I think that everyone [here] accepts that in the end each government will do what each government feels it has to do in particular circumstances. But, obviously, our federation will work better if there is as much communication as possible and over time if governments can be more sovereign in their own sphere.

“We only had that problem arising out of the budget because Commonwealth governments fund public schools and public hospitals, but we don’t actually run public schools and public hospitals. Now, we don’t have a prescriptive answer. What we have is a process.”

Abbott acknowledged the parameters for success required that it not increase the overall tax burden, and there was no reduction in overall service level:

“Things will only change if there is a substantial consensus, because while there are many aspects of our federation that do leave something to be desired, it is still, by any normal consideration, a strong and successful federation.”

South Australian Premier Jay Weatherill has been one of the most outspoken in his concern for future collaboration across government tiers, even travelling to Canberra to express his displeasure at broken agreements before a parliamentary committee on health. Weatherill was neither forgiving, nor forgetting:

“When we came to the last COAG meeting we had an agreed process, we then had a federal budget that left us all $80 billion short in terms of our health and education funding. That’s something that we continue to agitate with the Commonwealth, it’s something which amounts in our view to a breach of agreement and is something that’s not sustainable for states and territories.”

However, Weatherill spoke of the new resolution as a joint process and hoped that co-operation would be reflected in all future dealings.

Premiers Mike Baird (New South Wales) and Denis Napthineb (Victoria) had also raised concerns about broken education agreements, in particular Gonski funding. Napthine said Victoria would be pursing the six-year agreement in full:

“We believe that should be ongoing and quite separately there is a further debate about the issues in the white paper and the white paper may overtake that discussion but the white paper is a broader review of the whole arrangements between federal and state and funding arrangements.

“I think it is a great opportunity, 100-plus years since federation for us to have this root and branch examination of how we can do it better and I think the Prime Minister said very well that our federation by world standards works very well but it is an opportunity to look at where we can do it even better and I think the white paper provides that broader review, that broader opportunity, but in the meantime, for the education of children in Victoria, we have a six-year agreement. We have funding agreed for the first four years between the federal and state governments. We will continue to pursue the fifth and sixth year in the best interests of students in Victoria.

Baird, while no less passionate about getting full Gonski funding, disagreed with negotiating federal tax reform and education agreements separately, declaring he would be putting “all our concerns and all our passions and all of our ideas into this process”.

“This is a genuine opportunity to make some significant reform to issues that matter, to families and communities across this country. It is a responsibility that every single person here is very excited to participate in and we look forward doing that.”

Western Australian Premier Colin Barnett was blunt that the GST system has “failed”, leaving states with instability where it was supposed to create a reliable income for states. He warned that Queensland and NSW budgets would be the next hit.

The COAG communique agreement reaffirmed the goal of better outcomes and a fairer tax system for Australians:

“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 resolved this would contribute to the G20 objective to grow the global economy by improving the efficiency and effectiveness of the federation. This wide-ranging review will be conducted in a spirit of partnership in order to achieve consensus as far as possible on reform directions.

“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. Clarifying roles and responsibilities could involve significant reform in some areas, but would ensure taxpayer funds are better targeted and deliver better results for the Australian people. Greater clarity would also avoid the ‘blame game’ between governments if policy and services are poor.

“Jurisdictions will work together to ensure there is a well-informed, open and constructive public debate about the need for change and about any potential changes to existing roles and responsibilities put forward through the Federation White Paper process. The main focus will be on health, early childhood learning, schools, vocational education and training, housing and homelessness.

“Any change of roles and responsibilities will require governments to have certainty about appropriate revenues to fund their associated spending and service delivery responsibilities. The Federation and Tax Reform White Papers will therefore need to progress together.”

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