Statement on Federation

March 31, 2016

Australia’s governments must work together to solve the big issues.

Our economic plan is designed to ensure that as our economy transitions from the mining boom to a wider and more diverse economy, we continue to deliver the vital services and infrastructure Australians expect.

In Canberra on Friday, I will meet with Premiers and Territory Chief Ministers to discuss our plan to fund services in the years ahead, in the most effective way for all Australians.

For you.

Currently, Canberra collects taxes and provides the states and territories almost $50 billion a year in tied grants each year to fund services and build infrastructure. This results in ongoing arguments, negotiations and duplication in administration.

In many areas responsibility is far from clear and the only thing in ample supply is finger pointing and blame.

We’re all sick of it.

 A way to solve this problem would be to give the states and territories a proportion of personal income tax - rather than demanding money from Canberra they would be raising money themselves and be accountable to their own voters.

The focus of governments should be about delivering better services – not arguing over funding.

The key principles will be that this is not about increasing the total tax take - any income tax surrendered by the Commonwealth to the States would be offset by a reduction in Commonwealth grants to the states.

Taxpayers would not notice any administrative change - the Australian Tax Office would continue to manage the collection of income tax.

So, clearer lines of responsibility, less duplication, more open accountability.

The States' lack of financial freedom, their constant begging to the Commonwealth, the constant blame game - this is what is wrong with our federation.

Now we can't reform it ourselves - this has to be agreed with the States and we know it will take some time.

But the question for us all is this: do we want to keep complaining about the issue as we have done for decades? Or do we want to do something about it.

Let’s stop the predictable arguments, and focus instead on the best way to deliver effective services for all Australians.

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