The financial relationship between the Commonwealth and the states and territories (the States) has been significantly reformed following the Council of Australian Governments (COAG) meeting held in Canberra. Increased transparency and accountability are key features built into the new financial arrangements, which also provide a clearer specification of roles and responsibilities of each level of government. The Intergovernmental Agreement (IGA) and other documents giving effect to these new arrangements are to be finalised by COAG Senior Officials no later than 12 December 2008.
National Specific Purpose Payments
Under the new IGA, funding from the Commonwealth to the States will be made through five new specific purpose payments (SPPs) which have been simplified down from 96 SPPs previously.
The new arrangements will come into effect on 1 January 2009 and will provide the foundation for COAG to pursue a broad range of reforms within the health and ageing, education, housing, productivity, disability and indigenous agendas.
The new National Specific Purpose Payments include:
- National Healthcare SPP –$60.5 billion
- National Schools SPP –$18 billion
- National Skills and Workforce Development SPP –$6.7 billion
- National Disabilities Services SPP –$5.3 billion
- National Affordable Housing SPP –$6.2 billion
Each national agreement contains the objectives, outcomes, outputs and performance indicators necessary for states to receive funding under the arrangements.
National Partnership Payments
The new framework also includes a new form of payment- National Partnership Payments (NPPs) to fund specific projects and to facilitate and/or reward States that deliver on nationally significant reforms measured by specific benchmarks. The first round of National Partnerships beginning in 2009 includes:
- Hospitals and Health Workforce Reform
- Preventative Health
- Taking Pressure off Public Hospitals
- Smarter Schools –Quality Teaching
- Smarter Schools –Low Socio Economic Status (SES) Communities
- Smarter Schools –Literacy and Numeracy
- Productivity Places Program
- Fee Waiver for Childcare Places
- Indigenous Remote Service Delivery
- Indigenous Economic Development
- Remote Indigenous Housing
- Indigenous Health
- Social Housing
- Seamless National Economy
The new NPPs will be distributed among the states on an equal per capita basis phased in over five years with the exception of the National Schools SPP which is to be distributed according to full time-time student enrolments in government schools.
Health and Ageing Agenda
- COAG agreed to a number of objectives and outcomes for the health and hospital system which will be measures against specific benchmarks.
|COAG Health Outcomes||Commonwealth and State Performance Measures:|
|COAG Reform Council also to report on these performance measures:|
- The Commonwealth will provide at total of $64.4 billion in funding over five years for the State health systems, representing an increase of $22.4 billion from the previous Australian Health Care Agreements.
- The Healthcare SPP includes an increase to base funding of $4.8 billion over the forward estimates to 2012-13. In 2008-09 the increase to base funding will be $500 million. The application of a higher indexation formula of 7.3% per annum accounts for some of the increase.
- $3 billion will be spent over the forward estimates to 2012-13 on the Healthcare National Partnerships including:
|$1.7 billion||Hospital and Health Workforce Reform NP||Will fund undergraduate clinical training, including increasing the clinical training subsidy to 30% for all health undergraduate places, increase the number of postgraduate training places to 605 and establish a national health workforce agency and health workforce statistical register in order to drive a long-term strategy for the health workforce.|
|$448 million||Health Prevention NP||Over four years from 2009-10, ($872.1 million over six years starting from 2009-10) to support preventative health measures.
Performance benchmarks include:
|$109 million||National E-Health Transition Authority (NEHTA)||To further the e-Health agenda.|
|$750 million||Public hospital emergency department services||Additional investment in 2008-09 for public hospital emergency department services, which will fund the equivalent of 1.9 million emergency department presentations.|
|$1.6 billion||Indigenous Health NP||
Over four years from 2009-10 ($806 million Commonwealth contribution and $772 million States contribution) to achieve the ‘closing the gap’ targets including life expectancy and infant mortality.
Performance benchmarks include:
Productivity Agenda –Education
- The Commonwealth in total will provide an additional $3.5 billion over five years in school funding.
- The National Schools SPP will provide $1.85 billion in additional funding over the five years to 2012-13, including $868 million in 2008-09. The agreement includes:
|$412 million||Additional indexation||The government schools component of the National Schools SPP will be adjusted each year using a composite growth factor comprising growth in average school recurrent costs and growth in enrolments in government schools.|
|$635 million||10% AGSRC for primary schools||To align historical Commonwealth funding rates between primary and secondary government schools.|
|$807 million||National Secondary Schools Computer Fund||Funding only in 2008-09 for the legitimate additional costs of implementing the National Secondary Schools Computer Fund.|
The Agreement brings total SPP and funding for non-government schools to around $42.4 billion from 2009-2012, compared to $34.1 billion in the previous schools agreement (excluding Indigenous funding), an increase of more than $8.3 billion or 24.2% over 2005-08 funding. The government schools component of the National Schools SPP will be distributed among the States on the basis of full-time enrolments in government schools.
- COAG also approved the National Education Agreement, which will allow the states to allocate resources more flexibly, while providing a set of definitive and measurable targets to provide the basis for accountability by governments to the community.
|National Education Agreement Outcomes||Targets:|
|Further policy and reform directions:|
- Education National Partnership payments include:
|$540 million||Smarter schools –Literacy and Numeracy NP||
$150 million –to facilitate reform initiatives
|$550 million||Smarter schools –Quality Teaching NP||Funding over 5 years to 2012-13 to improve principal leadership development and teacher quality.
$200 million for facilitation of the NP
$350 million reward payments for achieving outcomes
|$1.1 billion||Smarter schools –Low SES schools NP||Funding over 5 years to 2012-13 to achieve educational outcomes in low socio-economic status (SES) school communities. The funding will actually be $1.5 billion over seven years and will be matched by state funding.|
|$970 million||Early Childhood NP||Funding over 5 years to 2012-13.
$15 million for data development and evaluation.
$955 million to achieve universal access to early childhood education for all children in the year before school by 2013.
Funding for a specific national agreement for Indigenous early childhood will be negotiated after 2012-13.
- The States agreed to implement the National Curriculum.
- COAG also agreed to a set of performance indicators to measure progress towards achieving agreed outcomes relating to transparency and accountability including:
- Streamlined and consistent reports on national progress, including an annual national report on the outcomes of schooling in Australia;
- National reporting on performance of individual schools to inform parents and carers and for evaluation by governments of school performance; and
- Provision by schools of plain language student reports to parents and carers and an annual report made publicly available to their school community on the school’s achievements and other contextual information.
- COAG also agreed that the new Australian Curriculum, Assessment and Reporting Authority will be supplied with the information necessary to enable it to publish relevant, nationally-comparable information on each school’s performance including national testing results and school attainment rates and other population, capacity and resource data.
Productivity Agenda –Skills and Workforce Development
- The Commonwealth will provide an estimated $6.7 billion over the forward estimates from 1 January 2009 to 2012-13 under the Skills and Workforce Development SPP.
|Base funding for the Skills and Workforce Development SPP includes:||
|National Training System||
|$36.7 million||Additional indexation||Additional funding from 2009-10 to go towards the Skills and Workforce Development SPP.|
- COAG agreed to a new National Skills and Workforce Development Agreement which sets out the commitment between the Commonwealth and States to work towards increasing the skill levels of all Australians.
|COAG National Skills and Workforce Development Outcomes||Progress towards outcomes measured by:|
|$1.2 billion||Productivity Places NP||
The Commonwealth had previously agreed to commit funding over four years for this NP. It will commence on 1 January 2009 and expire on 30 June 2012. Through this agreement States agreed to deliver an additional 506,750 qualifications commencements for job seekers and existing workers.
|$8.5 million||Fee Waiver for Childcare Places NP||
Commonwealth funding for 2008-09 to fund States to remove fees for the Diplomas and Advanced Diplomas of children’s services courses delivered at Technical and Further Education institutions and other government training providers to begin in 2009-09
- COAG agreed to a total commitment of approximately $10 billion under the National Affordable Housing Agreement (NAHA) and its associated NPs.
|$6.2 billion||National Affordable Housing SPP||COAG agreed to the NAHA, which will be increased by $46.4 million over the current forward estimates from additional indexation.
The NAHA will consolidate existing housing SPPs and fund a range of measures including:
|$800 million||Homelessness NP||The Commonwealth will provide $400 million of additional funding over five years to relieve the stress of homelessness. This will be matched with $400 million from the States. Implementation plans will be finalised by April 2009.|
|$400 million||Social Housing NP||To commence 1 January 2009, the Commonwealth will provide this additional funding over two years to 2009-10 for capital investment for social housing and homelessness.|
|$1.94 billion||Remote Indigenous Housing NP||The Commonwealth will provide this additional funding over 10 years ($834.6 million over five years).
This will provide up to 4,200 new houses to be built in remote Indigenous communities and upgrades to around 4,800 existing houses with a program of major repairs to commence in 2008-09.
- COAG has committed to help people with a disability to achieve economic and social inclusion, enjoy choice, wellbeing and the opportunity to live as independently as possible, and to support their families and carers.
|$5.3 billion||National Disabilities Services SPP||The Commonwealth will provide a total of $5.3 billion over five years. This will be an increase of $1.3 billion including:
- COAG had previously agreed in December 2007 and March 2008 to the following targets to close the gap between Indigenous and non-Indigenous Australians:
- To close the gap in life expectancy within a generation.
- To halve the gap in mortality rates for Indigenous children under five within a decade.
- To ensure all Indigenous four year olds in remote communities have access to early childhood education within five years.
- To halve the gap in reading , writing and numeracy achievements for Indigenous children within a decade;
- To halve the gap for Indigenous students in year 12 attainment or equivalent attainment rates by 2020.
- To halve the gap in employment outcomes between Indigenous and non-Indigenous Australians within a decade.
- The National Indigenous Reform Agreement outlines the objectives, outcomes, outputs, performance measures and benchmarks that all governments have committed to achieving through their various National Agreements and NPs in order to close the gap in Indigenous disadvantage.
- Indigenous Reform NPs include:
|$564 million||Indigenous Early Childhood Development NP||Agreed on in October 2008, this joint funding initiative will establish 35 Children and Family Centres across Australia in areas of high Indigenous population and disadvantage to increase access to ante-natal care, teenage reproductive and sexual health services and child and maternal health services.|
|$228.8 million||Indigenous Economic Participation NP||This is comprised of $172.7 million additional Commonwealth funding and $56.2 million State funding over five years to assist up to 13,000 Indigenous Australians into employment.|
|$291.2 million||Remote Service Delivery NP||This funding will be provided over six years to improve the delivery of services in 26 remote Indigenous locations. The Commonwealth will provide $154 million additional funding over 5 years to 2012-13|
- COAG agreed that at dedicated meeting will be held in 2009 to focus on closing the gap on Indigenous disadvantage.
Seamless National Economy
- In March 2008 COAG agreed to 27 priority areas for reform to the national economy to reduce the costs of regulation and enhance productivity and workforce mobility in areas of shared Commonwealth and State responsibility.
- The new Seamless National Economy NP will provide $550 million of additional Commonwealth funding to further progress towards achieving these reforms to improve efficiency and regulation across all jurisdictions.
- COAG also committed to a number of reforms under the business regulation and competition reform agenda including;
- Examining further planning and zoning policies and processes.
- A new governance structure for chemicals and plastics reform.
- Examining reforms to the voting arrangements of the Australia and New Zealand Food Regulation Ministerial Council.
- Considering options to improve national consistency in the monitoring and enforcement of food standards and options to improve food labelling law and policy.
- Implementing a national electronic conveyancing system to establish a single system for completing real property transactions and lodging land title dealings.
|Infrastructure||National Public-Private Partnerships (PPP) package||COAG endorsed this package which introduces a number of reforms to improve harmonisation and consistency of PPP policy and practices across Australia.|
|Climate Change||Feed-in Tariff schemes||COAG agreed to a set of national principles to apply to new Feed-in Tariff schemes and to inform the reviews of existing schemes.|
|Climate Change||National Energy Efficiency Strategy||COAG agreed that the determination of streamlined roles and responsibilities and the proposed single overarching framework for accelerating energy efficiency reforms should be deferred for consideration until early 2009 to allow further consultation with industry.|
|Climate Change||Renewable Energy Target||COAG agreed to consider the final design of the scheme at its first meeting in 2009.|
|Water||Water markets||COAG agreed to a number of reforms to improve the operation of water markets through faster processing of temporary water trades and coordination of water information and research.|
|Water||Murray-Darling Basin||COAG released a report commissioned in October 2008 on water recovery in the Murray-Darling Basin. The report shows that the Commonwealth and Basin jurisdictions collectively recovered water entitlements for an average of 177 gigalitres of water per annum, at a cost of nearly $295 million.|
|Working with Children||Exchange of Criminal information||Leaders agreed in principle in April 2007 to improve access to inter-jurisdictional criminal history information by child-related employment screening programs. COAG endorsed a set of implementation actions, including introducing legislative amendments within nine months, to enable the information exchange to commence in 12 months. COAG noted that all jurisdictions, with the exception of Victoria and the ACT, would exchange information on non-conviction charges for screening of people working with children.|
|Child Protection||National Framework for Protecting Australia’s Children||This framework is being progressed by the Commonwealth in close consultation with the Community Services Ministers’ Council and will be released in early 2009.|
|Review of the Report on Government Services||Terms of Reference||COAG agreed to the terms of reference for the Review of the Report no Government Services. The review to be undertaken by a combined Senior Officials and Heads of Treasuries Working Group in the first half of 2009.|
COAG meetings in 2009 are yet to be announced.