7 Council of Australian Governments — Collaborative Arrangements Across Jurisdictions

Summary[1]

Since the 1920s, the goals of intergovernmental arrangements in Australia have been directed towards coordination, preventing overlap in the provision of services, uniformity in the administration of common functional areas, and the consideration of national priorities.

The use of Commonwealth–State ministerial councils commenced in 1923 when the Loan Council was established as an informal forum. Following the Second World War, ministerial councils became an important element of intergovernmental arrangements as governments were willing to engage in mutual exchange and, by the early 1990s, there were over 40 ministerial councils. A number of these ministerial councils focussed on arrangements which were the subject of Commonwealth Specific Purpose Payments to the States. By 2007, the number of these Specific Purpose Payments had reached 92.

In 1992, the Council of Australian Governments (COAG) was established to improve efficiencies in the delivery of services between Commonwealth and State governments. Over time, COAG reforms have focussed on a wide range of matters, including roles and responsibilities, micro-economic reform, natural resource management and service delivery and in 2008, steps to modernise Commonwealth–State financial relations including:

• rationalising the 92 Commonwealth Specific Purpose Payments into five broad Specific Purpose Payments, subject to agreements outlining the objectives which clarify the roles and responsibilities of the Commonwealth and the States in each area and supported by performance indicators;
• a move away from the use of input controls for Specific Purpose Payments and a greater focussing on the achievement of outcomes and outputs in the delivery of services by the States and Territories without prescribing how this is to be achieved in areas such as health, schools, vocational education and training, affordable housing and disabilities; and
• the introduction of a new approach to assistance governed by National Partnership Agreements under which funding is provided for specific projects that facilitate reform. Some agreements involve incentive payments to reward performance.

The new model for Commonwealth–State financial relations in Australia is based on the principle that the States have the on-the-ground experience in how best to deliver services in their jurisdictions. With this in mind, the Commonwealth has put in place a framework aimed at providing the States with the flexibility to innovate and tailor solutions in a way that best fits the needs of their populations.

This model is a significant step in the journey and evolution of Australia’s approach to managing Commonwealth–State financial relations. Many of the challenges facing Australia are issues that need to be addressed through the Commonwealth working in partnership with the States and the design of this new framework includes a reporting framework that will focus on the achievement of results, value for money and timely provision of publicly available and comparable performance information.

[1] The case study summary provides the brief chronology and statement regarding the major innovation and lessons learned. The text draws on publicly-available material.

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