COAG Meeting, 26 March 2008
- COAG Reform Agenda: Reforming and Investing for the Future
- A New Reform Framework
- Implementing Commitments and Driving Further Reforms
- Next Meeting
- Related Documents
The Council of Australian Governments (COAG) held its 21st meeting today in Adelaide. The Prime Minister, Premiers, Chief Ministers and the President of the Australian Local Government Association, were joined by Commonwealth and State and Territory Treasurers. This meeting followed the successful meeting in Melbourne on 20 December 2007. It was the first COAG meeting ever to be held in Adelaide and was the first of four COAG meetings to be held in 2008.
COAG Reform Agenda: Reforming and Investing for the Future
All Governments today made an historic commitment to a comprehensive new microeconomic reform agenda for Australia, with a particular focus on health, water, regulatory reform and the broader productivity agenda.
On health and hospitals, the Commonwealth agreed to commit an immediate allocation of $1 billion to relieve pressure for 2008-09 on public hospitals. This $1 billion is made up of the indexation of the previous Commonwealth allocation for 2007-08 plus a further $500 million in additional new money. Overall this means an increase in Commonwealth funding for public hospitals for 2008-09 of 10.2 per cent. This decision reverses the national trend of Commonwealth cutbacks to hospital funding over the past five years.
COAG also agreed that in developing the new health care agreement there would be a review of the indexation formulas for the years ahead. COAG also agreed that the new Australian Health Agreement should move to a proper long-term share of Commonwealth funding for the public hospital system.
COAG agreed that the new health care agreement would be signed in December 2008 with a commencement date for the new funding arrangements of 1 July 2009.
COAG also agreed for jurisdictions, as appropriate, to move to a more nationally-consistent approach to activity-based funding for services provided in public hospitals – but one which also reflects the Community Service Obligations required for the maintenance of small and regional hospital services.
COAG agreed to the introduction of a national registration and accreditation system for health professionals and steps to address health workforce skills shortages.
COAG also made a major breakthrough on water with the agreement to a Memorandum of Understanding on Murray-Darling Basin Reform. This agreement will now enable the necessary action to address over allocation, improve environmental outcomes, and enhance the efficiency of irrigation in a concerted effort to achieve an environmentally-sustainable future for the Basin. See Attachment A.
COAG has agreed a far reaching and accelerated business regulation reform agenda across 27 areas of regulatory reform, to enhance productivity and workforce mobility by cutting the costs of regulation. See Attachment B.
On the broader productivity agenda, COAG has today for the first time ever embraced significant, long-term and ongoing reforms across all aspects of education - early childhood development, schooling and vocational education and training.
Sweeping reforms to the architecture for Commonwealth-State funding arrangements will enable the States to deploy Commonwealth specific purpose payments (SPPs) more effectively and creatively, enhance public accountability and sharpen the incentives for reform through new National Partnerships (NP) agreements.
Other agreements today include:
- COAG is working to ensure sustainable water supply and has expanded the CSIRO assessments of Sustainable Yields so that for the first time Australia will have a comprehensive scientific assessment of sustainable water yield in all major river systems across the country;
- COAG has for the first time embraced a new national approach to addressing climate change through a national emissions trading scheme and complementary policies and measures that achieve emission reductions at least cost;
- COAG has also agreed a nationally-coordinated approach to planning for, and facilitating, Australia’s infrastructure needs;
- COAG is well on track in delivering vital initiatives to assist housing affordability and reduce the number of homeless people; and
- COAG has set practical goals and agreed more than 23 specific actions across its agenda, aimed at closing the gap on Indigenous disadvantage.
The COAG Reform Agenda will boost productivity, workforce participation and geographic mobility, and support wider objectives of better services for the community, social inclusion, closing the gap on Indigenous disadvantage and environmental sustainability.
This new platform for cooperative reforms and investments - to strengthen our economy, empower more Australians to participate in, and contribute to, our economy, and make efficient and sustainable use of our natural resources - will deliver real benefits for Australian families and their communities, not only today but over a generation.
The COAG Reform Agenda is underpinned by a common commitment to clear goals, genuine partnership and the governance and funding arrangements needed to deliver real reform. A fresh spirit of goodwill has delivered breakthrough agreements in areas unresolved by COAG for too long. It will move on from the blame game to make federalism again work to deliver real outcomes in the national interest.
A New Reform Framework
Critical to the partnership approach is the reform of the architecture of Commonwealth-State financial relations.On the recommendations of Treasurers,COAG agreed on the key elements of a path breaking new Intergovernmental Agreement on Commonwealth-State financial arrangements, which will be finalised by the end of 2008 following extensive work by Treasurers and COAG Working Groups to settle outputs, outcomes, reforms, performance indicators and funding arrangements.
The new financial framework will result in a significant rationalisation of SPPs, primarily through combining many into a smaller number of new national SPP agreements, without a reduction in total Commonwealth funding for these activities. This reform will see a reduction from the current 92 SPPs to five or six new national agreements for delivery of core government services – health, affordable housing, early childhood and schools, vocational education and training, and disability services.
These reforms will clarify roles and responsibilities, reduce duplication and waste and enhance accountability to the community. The objectives and outcomes for each of the new agreements will replace input controls in current agreements.
The new agreements will focus on agreed outputs and outcomes, providing greater flexibility for jurisdictions to allocate resources to areas where they will produce the best outcomes for the community.
New NP arrangements will provide incentives for reforms, or for funding for specific projects, in areas of joint responsibility, such as transport, regulation, environment, water and early childhood.
For all new arrangements, a new performance and assessment framework will be developed to support public reporting against performance measures and milestones. Funding for, and the details of, the new agreements will be negotiated during the balance of this year, with the final Intergovernmental Agreement to be considered by COAG in December 2008.
To enhance accountability and promote reform, COAG agreed a new and expanded role for the COAG Reform Council (CRC). When requested by COAG, the CRC will report to the Prime Minister on the publication of nationally-comparable performance information for all jurisdictions in relation to individual national SPPs and the independent assessment of predetermined milestones and performance benchmarks under the proposed NP arrangements. It will also be responsible for monitoring the aggregate pace of activity in COAG’s agreed reform agenda. Attachment C provides further details on the CRC’s expanded role.
This new architecture for Commonwealth-State financial arrangements provides the platform for wide ranging policy reforms to improve economic, social and environmental outcomes.
Implementing Commitments and Driving Further Reforms
COAG noted the 26 implementation plans it commissioned of its seven Working Groups, chaired by Commonwealth Ministers, at its meeting at 20 December 2007. COAG agreed on further reforms in a number of areas.
COAG acknowledged that the Commonwealth should be responsible for its election commitments. In a number of the reports from Working Groups Commonwealth election commitments have legitimate and additional financial implications for the States and Territories. Consideration of these costs will be included as an addition to the work of Treasurers in the final determination of the new generation SPPs at year’s end.
Productivity, Education, Skills and Early Childhood
For the first time all governments have agreed on a common framework for reform of education, a key step in the Education Revolution. COAG has endorsed a comprehensive set of the aspirations, outcomes, progress measures and future policy directions in the key areas of early childhood, schooling and skills and workforce development that will guide education systems across the nation, building on the initiatives currently underway across States and Territories. COAG has also today agreed to four additional high‑level targets that it will use to measure the achievement of reform in Indigenous educational attainment and the vocational education and training sector.
COAG also committed to several key strategies to strengthen early childhood education and care, roll out the computers in schools and the trade training centres programs and provide additional training places under Skilling Australia. As an early priority, COAG has agreed to the development of a national partnership agreement focused on the particular educational needs of low socio-economic status school communities. This partnership will form part of the national education funding agreement to be introduced at the beginning of 2009.
Business Regulation and Competition
COAG endorsed a far reaching reform agenda for reducing the costs of regulation and enhancing productivity and workforce mobility in areas of shared Commonwealth and State responsibility. This exciting new broad agenda replaces words with actions, and reviews with fundamental micro‑economic reforms. The agreed implementation plan is available.
COAG agreed to 27 areas of regulatory reform. This includes a landmark Intergovernmental Agreement by May 2008 to harmonise occupational health and safety laws. COAG agreed that this is a top priority and that governments will closely examine the scope for a reduced implementation timetable at its meeting in July 2008.
COAG also agreed breakthroughs on 12 further regulatory reforms including trade measurement, environmental assessment and approval processes, rail safety regulation, product safety, trade licensing, further payroll tax harmonisation and institutional lending arrangements. COAG also agreed to an ambitious new COAG regulation reform agenda covering nine areas - standard business reporting, food regulation, mine safety, electronic conveyancing, upstream petroleum (oil and gas) regulation, maritime safety, wine labelling, directors’ liabilities and financial service delivery.
COAG welcomed and endorsed the CRC’s first report on the importance of, and the progress being made in, the implementation of previously agreed competition and regulation reforms under the National Reform Agenda. COAG agreed, inter alia, to the CRC’s recommendation that options be developed to assist those jurisdictions with limited legislative drafting resources to meet their current commitments and obligations.
Health and Ageing
In addition to the decisions on health funding already described, COAG agreed to the implementation of health reform in three stages.
- The first stage involves immediate action on Health Workforce Registration and transitional arrangements for the current healthcare agreement. These lay the foundation for longer term reform of the health system.
- The second stage involves COAG consideration at the December 2008 meeting of the new National Healthcare Agreement as part of the broader SPP Financial Framework. There will also be potential NP payments for medium-term health reform from July 2009.
- In the third stage, when the National Health and Hospitals Reform Commission (NHHRC) report of June 2009 is available, COAG will consider additional longer term health reform to be implemented either as updates to the National Healthcare Agreement or as new NP agreements over time.
COAG also took a major step towards improving Australia’s health system by signing an Intergovernmental Agreement on the health workforce. This agreement will for the first time create a single national registration and accreditation system for nine health professions: medical practitioners; nurses and midwives; pharmacists; physiotherapists; psychologists; osteopaths; chiropractors; optometrists; and dentists (including dental hygienists, dental prosthetists and dental therapists). The new arrangement will help health professionals move around the country more easily, reduce red tape, provide greater safeguards for the public and promote a more flexible, responsive and sustainable health workforce. For example, the new scheme will maintain a public national register for each health profession that will ensure that a professional who has been banned from practising in one place is unable to practise elsewhere in Australia.
In another boost to the health workforce, COAG agreed that Skills Australia would be asked to advise COAG at its July 2008 meeting on the possible allocation of up to 50,000 additional vocational education and training places over three years from 2008-09 for areas of national skills shortage in health occupations (including vocationally-trained nursing, emergency care and allied health occupations).
COAG also agreed key health reform priorities for further work ahead of consideration of proposals by COAG no later than October 2008.
Australia faces major challenges in ensuring sustainable water supply in the face of a drying climate and rising demand for water. Cooperative partnerships between the Commonwealth and all States and Territories is the key to addressing the water challenge across the country. This was recognised as far back as 1901 where the need for cooperation on the water sharing for the Murray River at the time of the ‘Federation drought’ was palpable. The pressures are far stronger today.
COAG has today agreed in principle to a Memorandum of Understanding on Murray‑Darling Basin Reform for immediate consultation with stakeholders. This agreement is as significant now as was the agreement of a century ago. We have for the first time in the Basin a cooperative and accountable governance arrangement, which will enable genuine whole of Basin water management to restore the environment and ensure sustainable agriculture in the future. Significantly, COAG also agreed that providing for critical human needs will be included in the Basin plan.
Governments will consult with stakeholders immediately on the implementation of the Memorandum of Understanding and have committed to sign an Intergovernmental Agreement at the July 2008 COAG meeting.
In reaching this agreement, the Commonwealth has agreed in principle to fund 90 per cent of the project costs, up to $1 billion of the Stage Two Food Bowl Project in Victoria, subject to a due diligence assessment and delivery of half the gains in additional flows to the Murray River. In considering priority projects in its due diligence assessment, the Commonwealth recognises that in States such as New South Wales and South Australia, infrastructure is privately owned. The Commonwealth will work with irrigators in these regions to ensure equitable consideration of funding proposals. Between now and the next COAG meeting the Commonwealth will agree with the governments of New South Wales, Queensland, South Australia and the Australian Capital Territory on priority water savings projects in the Murray-Darling Basin for priority Commonwealth funding.
The Commonwealth has also agreed to take on the States’ liabilities under the National Water Initiative risk sharing arrangements for new knowledge.
COAG agreed to set in train immediately a series of actions to report by July this year to coordinate efforts in purchasing water for the environment, enhance the effectiveness of water markets and assess water supply in remote communities, including Indigenous communities.
As part of a renewed approach to national urban water reform, leveraged through $1.5 billion in new Commonwealth Government urban water security programs, COAG has agreed to release for consultation eight key principles for urban water reforms.
COAG also commissioned the development of a comprehensive new work program of water reform to address over allocation and improve environmental outcomes, and to address the key challenges in urban water with the final proposal to be put forward for its consideration in October 2008.
Climate change represents one of the greatest economic and environmental challenges of our age. The projections for Australia of the impacts of climate change are serious: a drying climate in our traditional agricultural area; a greater frequency of floods; droughts and storms; and, the impacts of higher temperatures on community health.
The introduction of an emissions trading scheme to achieve emission reductions will constitute the most significant economic and structural reform undertaken in Australia since the trade liberalisation and financial market reforms of the 1980s. COAG stressed the urgency of the current work to bring together the different approaches on renewable energy targets to combine into one national scheme in order to provide consistency for investors looking to support Australia’s renewable energy industry. In addition, COAG agreed to consider options for a harmonised approach to renewable energy ‘feed in tariffs’ in October 2008.
COAG confirmed its commitment to cooperative concerted action to address climate change and agreed to finalise a comprehensive framework for addressing climate change at its October 2008 meeting.
COAG agreed that a more nationally-coordinated approach to further infrastructure reform is critical to enhance Australia’s future economic performance and raise national productivity. As a critical first step, COAG agreed that the immediate priorities for Infrastructure Australia over the next 12 months were the completion of the National Infrastructure Audit by end 2008, the development of an Infrastructure Priority List for COAG consideration in March 2009 and the development of best practice guidelines of Public Private Partnerships for COAG’s consideration by October 2008.
COAG identified the decline in housing affordability as a pressing issue for Australians and recognised that improving affordability is critical to addressing financial stress and disadvantage, including for Indigenous communities.
COAG agreed to implement five key housing initiatives: to facilitate improved housing supply through identifying surplus government land suitable for housing development; provide incentives to construct affordable rental housing; lower the burden of infrastructure and regulatory costs built into the purchase price of a new home; improve the evidence base for housing policy and program development; and, support the most needy in society through joint Commonwealth-State investment in 600 houses and units for homeless people.
COAG agreed to the distribution of $150 million to deliver new homes for homeless people. These funds will be distributed with reference to the number of homeless people in each jurisdiction, with a guarantee for smaller jurisdictions that no State or Territory will receive less than $1 million per annum.
COAG welcomed the decision of the Commonwealth to provide $30 million from the Housing Affordability Fund for the roll out of electronic Development Applications in local government with a priority focus on high growth areas. COAG requested the Local Government and Planning Ministers’ Council to make the implementation of this work a priority.
COAG reaffirmed its commitment to close the gap on Indigenous disadvantage and agreed to a new national target for its reform agenda -halving the gap in Indigenous employment outcomes within a decade. COAG agreed on a series of specific actions across health, education, affordable housing and water supply, that will begin to improve the lives of Indigenous Australians, including to provide at least 48,000 dental services to Indigenous people over four years under the new Commonwealth Dental Health Program, targeting the needs of Indigenous Australians through the Transition Care initiative, the elective surgery waiting list reduction plan and the Place to Call Home program for homeless people.
COAG asked the Indigenous Reform Working Group to bring forward a reform proposal on Indigenous Early Childhood Development to the COAG meeting in July 2008. COAG also asked the Working Group to bring forward sustainable reform proposals no later than the COAG meeting in October 2008 on basic protective security from violence for Indigenous parents and children, remote service delivery and workforce planning, and economic participation and active welfare.
COAG today agreed on the importance of tackling alcohol misuse and binge drinking among young people. COAG agreed to ask the Ministerial Council on Drug Strategy to report to COAG in December 2008 on options to reduce binge drinking including in relation to closing hours, responsible service of alcohol, reckless secondary supply and the alcohol content in ready to drink beverages. COAG also asked the Australia New Zealand Food Regulation Ministerial Council to request Food Standards Australia New Zealand to consider mandatory health warnings on packaged alcohol.
COAG agreed to continue to discuss issues related to problem gambling.
Review of Mutual Recognition Arrangements
COAG has requested that the Productivity Commission undertake a further review of the mutual recognition arrangements and report back to it and the New Zealand Government no later than the end of 2008.
World Cup Bid
All governments have agreed to work cooperatively with Football Federation Australia in support of its bid to host the 2018 Football World Cup in Australia.
COAG also agreed to establish two new ministerial councils – one on ageing and the other on international trade. The new Ministerial Conference on Ageing is to facilitate a consistent and coordinated approach to ageing and aged care policy across all levels of government, including reduced duplication of effort and better continuity of service delivery.
Following a request from the New South Wales Government COAG agreed to hold its next meeting in Sydney on 3 July 2008.
- Attachment A - Murray-Darling Basin Reform - Memorandum of Understanding
- Attachment B - Business Regulation and Competition Working Group
- Attachment C - Role of the COAG Reform Council (CRC)
- COAG Reform Council Report
- Competitive Neutrality Report
- Water Report from the Working Group on Climate Change and Water