Tony Abbott has issued a call to arms to state premiers to debate reforming the Federation. Photo: Andrew MearesPrime Minister Tony Abbott has issued a call to arms to state premiers to participate in a grown-up debate about reforming the Federation, the funding of health systems and the tax system in a Sir Henry Parkes commemorative address to be delivered on Saturday.
In a speech that will spark debate about how Australia’s systems of government work with each other, Mr Abbott will argue that states including NSW, Victoria and West Australia that receive a lower share of the GST from the Commonwealth, need to receive a fair go.
But, Mr Abbott will argue, any change in arrangements should not leave the smaller states such as Tasmania and South Australia worse off.
“It’s basically about giving everyone ‘a fair go’ – but it has to be fair to the states making the financial contributions as well as to those receiving them, to those who give as well as those who receive. It should be possible to make these arrangements more equitable between the larger states with the smaller states no worse off,” he says in an advance copy of the speech obtained by Fairfax Media.
On the imbalance between Commonwealth and state revenue – so-called “vertical fiscal imbalance” – Mr Abbott says “we could either adjust the states’ spending responsibilities down to match their revenues, or we could adjust their revenues up”.
The Prime Minister’s speech foreshadows the breadth and scope of the coming Federation white paper, and a separate taxation white paper, while explaining the evolution of his thinking on federalism from his days as health minister in the Howard government through to his 2009 book, Battlelines.
Mr Abbott will say he remains a “pragmatic nationalist” and that states can “hardly be abolished” so, “rather than pursue giving the Commonwealth more authority over the states, as I proposed in my 2009 book, Battlelines – better harmonising revenue and spending responsibilities is well worth a another try”.
“It would be better if one level of government was responsible for funding all health services – but that would mean the Commonwealth giving Medicare, the PBS and aged care to the states; or the states giving public hospitals to the Commonwealth. Either the states would lose relevance or well-respected national service provision would be fragmented. And so we go on”.
In a challenge to state premiers and chief ministers, Mr Abbott says all levels of government face a “fundamental test” over the next year as part of the Federation white paper process.
“Are we prepared to have a rational discussion about who does what; or do we think that the current arrangements, perhaps with some adjustments at the edges, are the best that can be managed under the circumstances?” Mr Abbott will say.
“Either way, it’s good for our system: we will end up with a more rational division of authority and responsibility; or we will be forced to stop complaining about a system that we’re not prepared to change.
“Rethinking the conventions about which level of government is responsible for the delivery of particular services or the revenue measures to which particular levels of government should have access will require a readiness to compromise … in our highly partisan system.”
Mr Abbott says that reforming the Federation is not something that one person, one party or one Parliament can achieve. The challenge for Australia, in debating Federation, is to create a more rational system of government.
“After two decades of ‘cooperative federalism’ and any number of agreements at Council of Australian Government meetings, we still have tradies who cannot operate across state borders”.
While he concedes that his push for “big bang” reform could fail, Mr Abbott says, “asking ourselves what can be done better is at the heart of all progress”.
The speech comes against the backdrop of a first budget that sought to recast the carve up of federal and state responsibilities, with Mr Abbott insisting he wants each level of government to be “sovereign in its own sphere”.
It also comes as the larger states push for change to the GST distribution formula.
In 2014-15, NSW will receive 97 cents for every dollar of GST it pays, Victoria will receive 88 cents and WA will receive just 37 cents. That happens because of horizontal fiscal equalisation, which is designed to ensure a similar standard of government services in all states.
States and territories are readying their submissions on the mismatch between states’ revenue raising capacity and their spending responsibilities and horizontal fiscal equalisation.
Before the middle of next year, Mr Abbott says, but after the coming state elections, all premiers and chief ministers will come together to reform the Federation.
This story Administrator ready to work first appeared on Nanjing Night Net.