Thank you all.
Today at our meeting we focused on practical outcomes to deliver services more effectively to the people of Australia.
As heads of government, we discussed how we can make the Federation work better.
We recognise that we have a serious structural budget problem – state and federal.
Terms of trade have fallen 34 per cent over the past four years.
Our own Federal Treasury has revised down revenue forecasts in every six-month statement since 2011, requiring eight successive downgrades of our budget revenue.
As I said at the start of the meeting this morning, we have to be clear-eyed about our choices, how do we get improvements to our infrastructure, to our essential public services when there are more demands on government but less revenue available to pay for it.
To deal with this challenge, as leaders of governments, we discussed more effective and innovative ways to fund our services and remove waste and duplication that stands in the way of effective and efficient delivery of them.
Now, we've reaffirmed that providing universal health care for all Australians is a shared priority between the states and the territories and the Commonwealth.
And as you can see, we have just signed Heads of Agreement for public hospitals funding from 1 July 2017 to 30 June 2020, ahead of consideration of longer term arrangements.
This will see the Commonwealth providing an estimated additional $2.9 billion in funding for public hospital services with growth in Commonwealth funding capped at 6.5 per cent each year.
As part of this agreement, all jurisdictions here agreed to take action to improve the quality of care in hospitals by reducing demand for hospital services through better coordinated care for people with chronic disease and reducing the number of avoidable hospital re-admissions.
Distressingly for too many patients they're re-admitted to hospitals as a result of complications arising from their original condition.
And all leaders were very supportive of the primary health care initiative that I announced yesterday with the Minister for Health, Sussan Ley.
This is a critically important part of containing health costs and ensuring that Australians get better health services.
Now, turning to schools, our contribution to school education is funded through to the end of 2017.
And COAG agreed that discussions on new funding arrangements would be concluded early next year.
Now, turning to the reform of the Federation, we've agreed to undertake historic reforms to undertake the examination of what will be historic reforms in the way the Federation is administered and governed – the way the funding of the Federation is governed.
We'll agree to consider income tax sharing within the current envelope and in return, states will consider state tax reforms which would, in turn, support economic growth.
There was not a consensus among the states and territories to support further consideration of the proposal that would enable states to levy income tax on their own behalf in circumstances where the Federal Government withdrew from a portion of its income tax collection.
I'll say a little bit further about those issues in a moment.
We've agreed to building on the recommendations of the Harper Review for competition and productivity reforms and to collaborate further to improve our cities and better target infrastructure investment.
We've agreed to support Indigenous procurement policies to continue to provide better opportunities for Indigenous Australians to participate and engage in the economy. Economic empowerment was a key focus of our discussions.
We've discussed the importance of ensuring greater representation of women in leadership positions. And there was strong support all around the table for doing so.
We agreed that while a lack of respect for women does not always lead to violence against women, all violence against women begins with disrespecting women. And we noted that much more work remains to be done to make sure women and children can live safely, and we could not be more unified in our resolve in that regard.
Now, turning to counter terrorism, following initial discussions at the December meeting, COAG agreed today that we, the Commonwealth, would draft legislation to introduce as soon as practicable a nationally consistent post-sentence preventative detention scheme with appropriate protections for high-risk terrorist offenders.
It is an unfortunate reality that some convicted terrorists may not be rehabilitated at the end of their sentence and will continue to pose a risk to the community.
At the same time, New South Wales is strengthening its pre-charged detention scheme and is consulting with other jurisdictions as they introduce it. The ACT reserving its position in that regard.
I want to also refer you to the communique on our deliberations on other very important issues, including the NDIS, national redress scheme, reportable conduct, medicinal conduct and of course statehood for the Northern Territory.
If I just may conclude on the big issue of tax.
Regrettably, the reality with which we have all been wrestling with is that the Gillard government's $80 billion of long term commitments to health and schools were never credibly funded.
The simple proof is that here we are three years later and governments – and I make no criticism of any kind against any of my colleagues here. Governments have variously proposed increases to the GST, to the Medicare levy or to income tax to pay for it.
Now I respect and recognise the states' efforts to try to find the ways to meet the gap between what was promised and the reality of our nation's finances.
We have to live within our means.
That much is clear.
We have to live within our fiscal envelope.
There will be no raising of income tax.
The states will not be levying an income tax and the Commonwealth will not be increasing income tax.
So our Federation reform process has to be focused on how to work within the current fiscal envelope to achieve the best long-term solution, most efficiently, to funding our schools and hospitals.
The importance of the income tax sharing proposal or consideration that we are developing now, is that what it will do is have the result of untying many of the very complicated, expensive to administer tied grants, which federal governments, over a number of governments, have made to states, and will give the states a greater access to resources, untied resources, so that they are better able to determine their priorities.
It will give the states greater financial autonomy to do their job of managing their affairs in the interests of the citizens they serve.
So it is an important step in terms of reforming our Federation. To ensure that every level of government is best abled to work as freely and effectively as it can in the interests of the people that we all serve.
CHIEF MINISTER GILES:
Well thanks very much Prime Minister. Can I start by thanking you for showing great leadership. I think we came into COAG a little bit uncertain, particularly with the cloud of income tax debate but we've certainly seen a great level of leadership, particularly around the health agreement that we've just signed, the heads of agreement to, the movement from 6 per cent nationally, as an average, to 6.5 per cent, I think, provides a great level of certainty. Particularly for the Northern Territory, as we seek to have increases beyond 11 per cent in the 3-year period on an annual basis.
In regards to the income tax discussion, I think we all agree that it would’ve been best if that discussion came out in a different format, in a different way and it’s created some challenges to date. The underlying principles of that income tax discussion and the reform of the Federation as the Prime Minister just put it, is about giving states and territories more autonomy in freeing up bureaucracy and red tape and from the Territory's point of view, that's a welcome opportunity.
I don't think that we have seen this level of offer for decades and I can't see it coming for decades to come, the abilities for the Northern Territory, in particular, to be able to have that freedom to be able make decisions with lower levels of accountability to Canberra but higher levels of accountability to constituents in the Northern Territory and I think that's something that's refreshing.
The one thing I've learned is it's easy to do nothing in politics, it’s hard to do something and when you make a decision, you always get criticised for it but the Prime Minister should be congratulated for bringing this opportunity for a debate to the table. We’ve had a lot of stop-start approaches with taxation, whether that’s GST or whatever it may be. We’ve now got this discussion on table and I think it’s a welcome opportunity for us to take that forward for the next two to three years.
In relation to the draft framework for Indigenous Economic Development I think this has been a long time coming. In indigenous affairs, we've spoken about social and justice rights for a long period of time and I've been a extreme pursuer of economic approaches in indigenous affairs. We’ve raised it at COAG for a long period of time. We’ve now got a draft framework where the principles have been accepted by all and that is about trying to get people, Indigenous Australians, into jobs and into business. We're seeing enormous successes in the Territory, particularly through Indigenous procurement but to see that now accepted at the national level, I think, will drive change right across the nation and I congratulate all jurisdictions who are driving reform in that area.
I think it's great to see the outcomes of the report into domestic violence and child protection. I look forward to seeing some of the work being undertaking, particularly through Chief Minister Barr at the ACT level in that regard and also pursuing a scheme of redress that seeks to support current methods that are operating in different jurisdictions and also how we can support that on a national basis. The Northern Territory will be following New South Wales’ lead with its pre-detention legislation for acts of terror and we look forward to seeing that pursued through the NSW Parliament.
And just on a final note, the issue around the backpacker tax. I think the backpacker tax is something that is not widely spoken about but it is an economic issue for Australia. I note that there is a review going on particularly around its effects in the agriculture and tourism sectors but I think we need to keep the pressure up because that review will lead to outcomes in regards to backpackers and it’s certainly having an effect on regional and remote Australia and particularly on the tourism industry. So the sooner we can get some changes in that area, the better we can be from an economic point of view in those particular sectors.
Thank you Adam. Mike?
Thanks Prime Minister. I also want to thank the Prime Minister for this COAG. Certainly I’ve been coming down to these now for five years and I think it’s one of the most productive and certainly it is very clear that the Prime Minister is wrestling with how can we make our Federation better and is genuinely putting forward ideas and proposals on how to do that. Certainly what happened back in 2014 in relation to health and education, we've been very clear on this. That wasn't fair and that wasn't reasonable. What we have seen today is a restoration of that. That is the Commonwealth and the states and territories coming together in doing health and funding health in the long-term together. That's a very important change on the back of what we have seen here today. In terms of the funding reality, as part of that, we've only asked for what we think is a reasonable contribution. That's trying to get expenditure aligning the contribution to the expenditure of health and accordingly, from a NSW perspective, you know we came seeking close to a billion dollars as part of that partnership and we have received that. So we are positive in terms of what has happened with health.
Longer term there remain challenges which are clear but we'll be doing it together and I think that's a very important part of this. On the education side, I mean, we welcome the Commonwealth Government still has left open the option in terms of funding of the Gonski agreements beyond 1 January 2018. NSW has committed to it, remains committed to it and continues to seek and will continue to argue for its funding on an ongoing basis.
On the matter of tax reform I think it’s very important we note that tax reform remains on the table. There's some contributions that have been undertaken here today. But from a NSW point of view, the fiscal gap is a reality. We can pretend it's not here but it is there. If you look between 2020 and 2030 how we collectively deal with that is going to be a challenge and considering further options on tax reform is something we all will have to do and I don't want anyone to think, certainly from my perspective, that there has been any white flags raised in relation to tax reform. We have to be prepared to do it because funding that gap, ensuring the economy is growing, remains a challenge that we collectively all share.
Lastly I certainly want to note and appreciate the support of the COAG in terms of significantly strengthening the pre-charged detention. It's something that our police and security agencies have been asking for in light of current events it remains I think, even more important. It provides an opportunity for an increased detention up to 14 days. It also provides a capacity to question those suspects and certainly I think the onus is on us to do all we can to provide those sort of measures to our forces on the ground that are doing everything to keep our community safe, so certainly welcome the progress here today.
Very good. Dan?
Thanks Prime Minister. I think it’s important that we take a deep breath and just acknowledge that whilst we've signed an agreement for additional support for our hospitals and that's significant, hundreds of millions of dollars today in extra funding for say Victorian hospitals does not replace billions of dollars that have been taken away from Victorian hospitals. Premier Baird just made some comments about the unfair nature of 2014 and we can't dance around that. We can't ignore it and the Prime Minister went to it in his own comments earlier on.
I'd just ask people to remain focused on the context here and whilst an agreement today is a positive, there's no getting away from or getting around or politely explaining away the fact that many billions of dollars will not be flowing to hospitals in my state and hospitals right across the nation as a result of decisions made in the 2014 Budget. They are not reversed today and that's a really important point for us all to acknowledge, in a decent way but in a fundamentally honest way. We would not be true to patients across our nation if we didn't do that.
A couple of other quick matters. I'm very pleased that colleagues have agreed that at our next meeting I'll bring a more detailed report on the Royal Commission into Family Violence. A number of those recommendations of the 227 recommendations, a number of those called for me to take to COAG a number of issues and I'm very grateful to the Prime Minister and to colleagues for their agreement to do just that at our next meeting. There was a very productive discussion particularly around family violence, counter-terrorism and a whole range of other measures, the National Disability Insurance Scheme to which we're all fundamentally committed. This was a productive meeting. But the context in which this meeting was held and the reality that our doctors and nurses and paramedics and patients, will face tomorrow and the day after that cannot be glossed over. I won't allow that to happen.
Thank you Prime Minister. Our Federation works best when we all work together. And I thank the Prime Minister for the first step in recognising that health is one of the most fundamental issues that is facing Australians across our nation. In fact, there is nothing more important than making sure that we have good quality health care for all of our citizens, no matter where they live. In Queensland alone we have 169 hospitals. We have 20 in the regional cities. We have others spread right across from the Cape looking after communities as far as the Torres Strait. And that means that it's going to cost us more to deliver those services. And whilst this recognition today of this health agreement will provide Queensland with $445 million over three years, which I didn't have before I came to this meeting, that is a good first step. But also recognising what Daniel Andrews has said and Mike Baird, there is still a gap. There is still a huge gap.
And that means it's going to place a huge strain on our hospitals. It’s going to mean more work for our doctors, our nurses, our administrators and I want to thank all of those health care professionals out there because they do good work day in, day out. Secondly, education is extremely important. You can't have innovation and ideas unless you have good quality education and education starts at a young age. I'm very concerned if there's any further proposals to look at splitting our public school system from our independent schools and our Catholics. I think that would be detrimental to the nation.
In relation to domestic violence, I think we all agree this is a huge issue and just, overnight, in Queensland a woman was tragically stabbed to death, the neighbours witnessed it, heard it and she died on the front driveway. This has got to stop. You know, the media highlighted that one because it was public. But women are still getting murdered and killed behind closed doors in all different sections of our community and we've got to do more.
Rosie Batty did an enormous work when it came to tackling domestic and family violence and all of our states and territories are working towards it and Prime Minister, I thank you for agreeing for the national domestic violence summit which will be held in Brisbane, in Queensland, at the end of October where all premiers and first ministers will be invited because we have to keep tackling this issue.
Finally, we also talked about other important issues and I think one issue, which as a nation and I know it’s very important in Queensland as well, is in relation to the redress schemes and what's going to happen there, the victims of historical abuse. What we have seen there are the emotional stories, these people have been impacted, they'll be impacted, they'll never forget what's happened for the rest of their lives and some people have lost their lives. It’s an important issue, it’s a national issue and it’s one that the states and territories will work with you, Prime Minister, because these people need to have their stories told.
Thank you Prime Minister. Look I was pleased that this COAG meeting did look at some of the bigger issues for the future of the Australian Federation and its tax system, in particular. There’s no doubt with commodity prices falling, Australia faces a lower level of national income than we would have thought and if we're to maintain what I think is an excellent health, education system and so on and maintain and raise living standards then government itself has to be more productive. So I'm very pleased the Prime Minister did raise some issues like the states sharing an income tax in the future. You know my views about GST. I don't think that can be ignored.
Similarly, I think, we need to look very seriously at defining responsibilities better between the Commonwealth and the states. If you take the example that's just been referred to, schools, well you know 70% of kids go to a government school and the state government’s fund 85% to 95% of state government schools. So we already basically got that. We might as well clean it up and have clear delineation of responsibility. There'll still all be a national curriculum, still be standards, registration and the like. So I just hope that we can over the next two or three years have that discussion and that we look at the facts rather than what we might perceive to be some of the issues or problems. So that's a good thing. I guess also pleased about the health agreement. Obviously that helps every state.
And I just make a passing comment on the gap, if you like, the so-called eighty billion dollars during the time of Julia Gillard. I was the only person here today that was here then, that time ago and I remember that COAG meeting very, very clearly. It was somewhat chaotic. There were little private meetings in different rooms as the then Prime Minister and state premiers scurried from room to room and the eighty billion dollar figure appeared. I didn't at the time ever believe that that was a realistic number or that could be properly funded.
And it was inconsistent in all sorts of ways. Gonski, good principles about education but I'll give you one example from a Western Australian perspective. Some of the figures touted at that meeting, for example, showed that one school in Queensland would receive extra funding, which I don't begrudge, but one school in Queensland would receive extra funding which would exceed all of the extra funding going to all schools in Western Australia. That was the level of inconsistency and ad hockery about that so called $80 billion.
So look, I know that we had various premiers at the time walk out, Neville Chamberlain style waving the piece of paper, peace in our time. It wasn't and it hasn't been and it won't be. It is true to say, and I think Mike Baird and others have made it clear, funding health is our biggest challenge right across Australia. I think the Prime Minister has said that's something we'll have to share in. I think the progress over this week, this week has been good.
Thank you very much. Jay?
Thank you, Prime Minister. If we're to be a first-class nation we need a first-class health care and education system. And while people can talk about reductions in national income or problematise the size of the need, there is one reality here and that is these should be the first call on the nation's finances not the last call. Since the 2014 Budget, that's what we've been doing, we’ve been seeking to bring the Commonwealth to an acceptance to a proposition that this is a shared responsibility in the national interest.
The positives out of today's discussions are that we've identified that these are shared responsibilities. The other positive is that there has been a modest contribution to the health challenge in the short-term. In our case, about 18% of the cut that's going to occur over the next few years. The third thing that I think is important is that the Commonwealth has been prepared to share what is a great tax, which is the income tax arrangements. The mechanisms for doing that is already being explored by the Treasurers, which is to take specific purpose payments, the so-called tied grants, and convert them into a share of income tax. Finally, we made an important set of decisions about how to reduce the demands on our hospital system.
The truth is, we are joined in a very substantial way because the Commonwealth has the primary health care system through Medicare and important exit points from our public hospitals in the aged care system and so there is no other mechanism for the future of sustainable public hospital systems than to have cooperation.
So, the work we're doing together on ensuring that chronic diseases are better managed outside of hospitals will make an important contribution.
So those are the positive things. The things around which there still remains work and there is still areas of disagreement is the size of the gap. This is a massive challenge for us. And, of course, we've not yet seen a response on education. But I think that there is a truth and this is something that we are at odds with the Commonwealth about. There is a revenue problem in this nation.
There are needs, in particular in relation to hospitals. It is not a question of whether or not which level of government funds it. The reality is this expenditure is locked and loaded. These people are coming into our hospitals. The real question is who bears the burden of actually meeting that need. And there has to be a substantial discussion about increased revenues. And we put on the table things like expanding the GST to cover financial services. That measure alone would raise about $4 billion per annum.
We are going to have to return to revenue measures at some point. So there remains positive things out of today but also some further unfinished business, but, by and large, we made important progress on, really, the consequences of the 2014 Budget.
Thank you, Jay. Will?
Thanks, Prime Minister, and colleagues. Look, I think it was a very successful COAG meeting for our nation and, indeed, for Tasmania. We reached an agreement to not proceed with a proposal for states to levy their own income tax and as the nation's smallest state, Tasmania was, perhaps in the position of greatest risk.
But notwithstanding that, we were able to secure an agreement to explore an opportunity to better resource-share and to share that income tax base – a growth tax, one which will provide greater certainty for states, more autonomy and responsibility. It will reduce duplication and, I believe, deliver better outcomes for our taxpayers.
We also reached an important agreement on health. It was acknowledged that it is a shared responsibility and there can be no question that all levels of government accept responsibility and, indeed, are accountable for performance in our health system. Just ask any state health minister.
And the states accept their responsibility and we want to work in partnership with the Federal Government to deliver better outcomes for people needing better health services. And it was an important step forward for Tasmania. It is an additional $54 million into our health system.
So it is a very positive step forward. We appreciate that and look forward to ongoing discussions with the Commonwealth on that front as, indeed, we do in relation to education funding. And we'll continue to fight for Tasmania's fair share of education funding, for better outcomes for Tasmanian students working in partnership with our Commonwealth Government.
We're also very keen to continue the positive work that has been done in the areas referred to, most particularly for me, the effort in family violence, which is a shared commitment, one which every government is tackling and addressing head-on. As a small state with a very big heart, we're doing our bit to ensure that our response to addressing family violence continues and working in collaboration with our state colleagues.
So, thanks, Prime Minister. I agree that it is important that we have these discussions and we've got to put them on the table. We may not always agree and there'll be different perspectives from each and every state, but it won't stop us having these discussions about how we can make the Federation work better. I think there was a very different, new approach to that through this COAG meeting today.
Well, thank you.
CHIEF MINISTER BARR:
Thank you, Prime Minister.
It did feel a little like the greatest hits of federation, this COAG meeting, things we've all heard before, discussions that have been going on and on and on.
That we were able to move beyond just discussion on items beyond the 24-hours news cycle is perhaps encouraging.
On the specifics of the outcomes, health – well, look, to put this in perspective, $250 million was cut from Canberra's hospitals. We'll get about $50 million back as a result of this outcome. And I needed a side deal with the Prime Minister in order to be able to achieve that. So, I appreciate that support, Prime Minister, but it's still disappointing that we have not properly resolved this matter.
On education, if there is going to be a fundamental change in the federation, and who has responsibility for education, we can't separate government and non-government schools. That's a line in the sand for the ACT. In the simplest of terms, if the states and territories are going to take responsibility for school education, then it should be all schools. We shouldn't have this split between Commonwealth funding for non-government schools and the states and territories having responsibility for government schools. So it's one-in, all-in, or we don't change.
On tax reform, the ACT together with South Australia demonstrate that it is possible to reform taxes at a state level and we have continued year on year to reform our taxes, to abolish stamp duties and insurance taxes and move towards broad-based land taxes. So it is possible and there are jurisdictions undertaking this reform. That doesn't detract from the fact that as a nation we have a revenue problem. And I agree with my colleagues on that point.
Finally, I’m delighted that we have an in principle agreement across the federation for a nationally consistent reportable conduct scheme. Let’s be clear, the public confidence and the ability of institutions of all sizes and types to respond appropriately to allegations of abuse or neglect towards children, there's shaken public service as a result of the royal commission.
Our institutions across the jurisdictions need to be able to respond. The inconsistencies that are there and the levels of oversight, it’s certainly creating difficulties in identifying risks for children and young people. So we need a harmonised reportable conduct scheme.
And that my colleagues have agreed to that is a great advance today and I thank them for that.
Thank you very much. The voice of local government?
Thank you, Prime Minister.
Local government appreciates and values our formal membership of COAG, in recognition of the role we way in the Federation, not only employing 180,000 Australians but managing in excess of $350 billion worth of important community infrastructure.
In that regard, I welcome and have accepted the Chief Minister Giles warm invitation to meet with him in his capacity as Chair of the Council for the Australian Federation which represents the interests of states and territories prior to future COAGs and to discuss mutual issues before the COAG agenda so that we can continue to make a constructive contribution towards COAG and our country.
Obviously, a significant focus of today's meeting was on health and taxation, and appropriately so. However, there were a number of important and significant issues that are of direct relevance to local communities.
Namely, the draft national Indigenous participation framework and local government is an active contributor to not only driving the prosperity of Indigenous Australians through employment within our sector but also through the procurement of products and services by Indigenous-led businesses.
Additionally, we received the report on reducing violence against women and children and, again, local government plays an important role in working collaboratively with the state and territory governments and the Federal Government in addressing this scourge in our society. But particularly through local role models and we look forward to continuing to partner with the state governments, territory governments, federal governments so that we can collectively reduce the scourge and the incidence of violence against women and children.
[inaudible] your idea of allowing states to levy their own income tax would you like to return to it at any point in the future?
And do you accept the point of your colleague Adam Giles, it would have been better if that discussion had come out in a different format, a different way?
Well, just dealing with the first one, the proposal which had its origins in the COAG meeting of last year when we agreed to come back with revenue-sharing proposals, and that's exactly what we did.
There is simply not a consensus, not anything like a consensus of interest on the part of COAG. So the answer is that proposal is not there. It is withdrawn. It is not acceptable to the COAG. And so, there will be no state or territory involvement in levying income tax. And there will be – and we are certainly not proposing to increase income tax ourselves.
As far as the process of raising the matter, as you know, it was put on the table at the discussion between heads of – you know, premiers departments and founds its way into the media.
Look, we've got to look at how we stretch our dollars further. It is no good just simply thinking we can go on the same way and, you know, clearly we are living with constrained resources and we have to live within our means.
Now, recognising and respecting the views of the state and territory leaders, what we have agreed to do, to pursue, and what we're prepared to do, is provide a share of personal income tax, which does have strong growth characteristics, in replacement for the cancellation of tied federal grants.
This would not result in states getting more money – immediately – though they would have a good growth profile, but it means they would have greater freedom. Greater freedom to determine how they spend that money. It would give them greater financial autonomy. There is a lot of money, as the state and territory leaders will tell you – Adam has some particularly interesting examples – of areas where the Federal Government is literally telling the states how to run particular parts of their duties in a manner that creates enormous duplication and waste and, really, denies the states the ability to make that important judgement, which you have to do in a world of limited resources, "what is my priority? Where am I going to spend the limited dollars that I have?" We believe this is a very important reform. It is respecting the states and territories, respecting their ability and giving them greater freedom. Now, that's the, that is a very important step forward. Now in addition to that, there is the question of accountability. Of course, every state minister, every state premier and chief minister is accountable to their constituents, as we all know.
Politicians are very accountable. But of course the ultimate accountability is actually having to raise in taxes the money that you spend. Now most, in some jurisdictions, most of the money comes, the state and territory money, comes from the Federal Government. In all of them, a very substantial part of it does. Generally, in the order of half. And, of course, it is the marginal dollar that comes from the Commonwealth. So how do we drive greater transparency and accountability? And you’ll notice that we’ve agreed we will enhance transparency by providing a greater level of real-time data on how Government money is spent and on the outcomes and performance of Government initiatives.
Now every jurisdiction here is making steps in that regard including our own. Mike Baird's work with dashboards modelled on the UK approach where people, taxpayers can see where their money is being spent in real-time, this is a very important step. And so we will work with our colleagues here to ensure we do more of that. Transparency, accountability, are absolutely critical to governments being able to make better choices and being seen to do so by the people whose dollars they are spending and who they're helping.
School funding is obviously put off until next year, but I notice that Premier Baird said that there was still - the Federal Government's still considering the option of funding the full Gonski. Can you comment on whether the Federal Government would fund the full Gonski reforms?
Look we are not wedded to, as much as I admire David Gonski, we are not wedded to that particular the "full Gonski" whatever that means. The full Gonski I went to school with in 1967. So I'm very familiar with him. But what we are concerned to do, and this is exactly the point with health - rather than harking back to promises that were made in circumstances that, as Colin has described, were barely credible, the thing to do is focus on "are we getting the outcomes we need, the outcomes our students and our patients in the health area need, by using our limited resources as effectively as possible?" If there is not a readiness to raise taxes and we believe our taxes are already very high at the federal level - we've been encouraged to raise the GST, we've been encouraged to raise the Medicare levy. State governments and territory governments are not disposed to take on responsibility for raising a portion of income tax, and I respect them for their decision in that regard.
But if we are not going to be raising taxes then we have to work within our existing fiscal envelope and make sure that we get the best outcome by using that money in the most nimble and appropriate manner. And that's why this freedom, this greater financial freedom and autonomy that states will have by unwinding many of these so-called tied grants - and they do, in some respects, tie jurisdictions up in knots - by unwinding them, will give states, these leaders here, greater flexibility in allocating priorities.
Mr Weatherill you first proposed this income tax-sharing idea, or variation of it, I think, of 17 per cent, and in return the Commonwealth would keep all of the increase in the GST. Are you prepared to drop that part of your proposal now on the GST to get a workable solution on this income tax-sharing?
The way this started was essentially the $80 billion cut and then we had the proposition by Premier Baird which was about 15 per cent GST. And we had essentially a Liberal conservative Premier saying that we had a fiscal problem that needed to be addressed with a new revenue measure. I supported him in that. What became apparent though is at the same time, we had members of the Federal Government who were saying that they wanted to spend the increase in the GST on tax mix switch. So in other words, reducing other forms of Commonwealth-direct taxation, so it was apparent we had a stalemate. Our analysis of the GST was that, while it would help in the first five or 10 years, ultimately you'd be back to where you started from, because growth in health was growing faster than the rate of growth of GST. So you needed something that more approximated the rate of growth of healthcare expenditure. So that's why I proposed, in a sense, something to end the stalemate, which is the Commonwealth are keen on a tax which mix switch, then they could have the 15 percent GST the extra 5 per cent. And we would then get a share of income tax. So it's never really been - if the ambition to not do tax mix drops away, then I'm relaxed about the increase in the GST dropping away. Be what we do need is a share of a growth revenue which more approximates the rate of growth of GST. If you cash in every specific purpose payment, it gets you to around about 17.5 per cent, and that - over time - because some of those specific purpose payments don't need to grow at the rate of health or at the rate of income tax growth - the blended average of those gets you closer to the healthcare expenditure. So that's why we put that on the table, and I think we've made an important first step in that direction. There's a lot of complex issues still to raise, but I think this could be an important step forward for us all.
Prime Minister, pretty much all of the...
The income-sharing agreement, I think, has been put to you today by the WA Premier, Colin Barnett, that there would need to be a reassessment of the Commonwealth Grants Commission, because any advantage in flexibility and agility when it came to spending the state component of the income tax could actually be eaten away in lower GST payments. Do you agree that there needs to be a Commonwealth Grants...
I think…where is Colin? There. We've, Andrew, that's, I think, really, you should address that to Colin. That's not a conversation, no well it's not a conversation we've had.
[Inaudible] In the context of a shared income tax idea?
Well, the - the proposal that we made to the states and territories was one where - was one in, you’d say, really, of a full-blooded income tax sharing, where we would literally reduce the amount of income tax we shared, and state and territory parliaments would have the ability to impose an amount of income tax to take up that gap that we had created - take up that room. And there isn't an appetite to do that. So what we are talking about, and that is...you know that's fine. That is their right. It's my job to lead reform, to push the envelope, to try to help, with my colleagues, make the Federation work better. So we've made that proposal. But it is not, it doesn't meet with the consensus of the room. But what we are able to do is to, nonetheless, provide greater financial autonomy and freedom for states by as we've said earlier, untying a number of these tied Commonwealth Grants to the states, which will then - and replace that with an equivalent amount of money, which comes as a share of income tax revenues, which then gives that stronger growth, but also gives that ability to prioritise. You see, so much of how states, you know, successive federal governments have over the years - and in particular, one of my predecessors - not Mr Abbott, one of the other predecessors on the Labor side, in particular, was especially keen on these, of tying up state governments with grants which essentially restricted how they would, how they were running their own affairs. And the utility of so many of these is, you know, is underwhelming. So what - if you're in a world of constrained resources, then you need to be able to have as much freedom as a Government, as possible, to allocate your priorities. That's what we're going to do - we being our treasurers, will be working to ensure that we are able to do that. And that is the work that Mr Morrison and his colleagues at the State level will be doing.
Prime Minister a lot of the premiers have spoken about a fiscal gap. Are you saying that you think that gap - whatever number you put on it - can be entirely filled by savings and efficiencies and that nobody up there needs to raise additional revenue?
Lenore, what I'm saying is that we are commit-- we believe that the federal tax burden is already high. We do not seek to increase the net tax take of the Federal Government. Australians are already paying very high levels of tax. And what we are determined to do is to use the resources we have more efficiently - and we believe all levels of Government can do that, in other words, work within that fiscal envelope that we have to get the outcomes that we need. And that should be the measure. The focus should be on outcomes, not - with all due respects to others - harking back to unfunded promises that were made years ago.
…fiscal envelope, you can deliver decent hospitals and schools?
Yes. The growth - the proposal today is, the agreement today, delivers a substantial additional funding at a very substantial growth rate, 6.5%.
Do you agree that that's the case - that by '24-25, within the existing fiscal envelope, within the existing taxation system, can l start with you, Jay Weatherill, do you think that you can meet those costs?
I just said no and I think you know, it’s why I've sort of been out there at some political risk saying that we don't raise enough taxation as a nation to meet the imperatives that we have. So, I mean, the answer's no, from my perspective.
I mean, I want to - sorry, Annastacia you go.
I mean I think, this is incredibly important because what we've achieved today is a big step forward. So in terms of what the funding is and the requests from funding in terms of hospitals til 2020, the Prime Minister and the Commonwealth Government have actually provided something that I think is very fair and reasonable and that is - what is the expected hospital costs over that period? And the Commonwealth have contributed to that level. Not beyond it but to that level. So we have a position till 2020.
And the fiscal reality is - look at their budget. I mean, their budget is in massive challenges. Our budgets really start to get into massive challenges beyond 2020. So to 2020, I think we can - in relation to our hospitals, I think we can say we have the funding for hospitals and the Commonwealth Government are making decisions in relation to this.
Beyond 2020, to 2030, we have challenges. And I agree, I agree with Jay - it's not just an expenditure problem. I think we have an expenditure and revenue problem. Both of them and we have to be honest about that and I think I've certainly put out a number of proposals in relation to tax reform, part of which is additional revenue - I think that is the reality that’ll face us. It’ll now face us later, but before we get to 2020, they're the sort of discussions we have and the options we choose are the important ones. You know we need to make sure we're right. We need to do all of the work to make sure they're as efficient as they possibly can, that the expenditure we are doing, we are minimizing that as possible and the tax options are the best for state and country.
Okay thank you very much.