A new federation: tollways, tax and fixing the fiscal imbalance

As the Prime Minister kickstarts debate, experts and former politicians from both sides of the divide offer their road maps for reforming the federation in a new CEDA report.

Australia should consider bolstering the GST, giving the states a portion of income tax and extending the use of tollways on city roads to help overcome the vertical fiscal imbalance, argues a report on the federation released today by the Committee for the Economic Development of Australia.

The alternative, it says, is expanding the rollout of activity-based funding in health, education and welfare policy.

The report comes as Prime Minister Tony Abbott declared in a speech on Saturday that “a century of encroachment has left the Commonwealth financially responsible for vast services that it doesn’t actually deliver and can’t control”.

A Federation for the 21st Century also recommends instituting a series of federation conventions in the lead-up to next year’s white paper, so as to broaden public interest and input into reform, as well as increasing transparency in the Council of Australian Governments and creating a new “Federation Reform Council” to take the place of the recently abolished COAG Reform Council.

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