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COAG meeting proposals on reform of federalism arrangements leave some scratching, others shaking their heads

Last week’s COAG meeting in Canberra between federal, state and territory government leaders was noteworthy due mainly to the last-minute proposals put forward by Prime Minister Malcolm Turnbull, suggesting that the states should raise a portion of overall income tax to help them pay for essential services such as schools and hospitals.

Amongst the white noise of media pundits describing Turnbull’s moves as somewhere between visionary and crazy, several contributors to The Conversation have cast the meeting’s discussions and decisions in a more temperate light.

Modelling shows why premiers are wary of Turnbull’s tax proposal

‘If Australian states and territories were to levy an income tax based on residency, the revenue would vary considerably between jurisdictions with wealthier states benefiting more from such a regime compared to poorer jurisdictions, modelling shows.

‘… Any new state income tax levies could be harmonised with the existing federal tax and administered by the ATO, minimising administrative and compliance costs. However, despite this improved accountability, allowing the states to set their own income tax rates creates administrative complexity and has significant distributional implications.’

Hospital funding deal: experts respond

‘State and territory leaders today agreed to a three-year interim hospital funding deal to meet some of the shortfall left by the 2014 Commonwealth budget cuts.

‘Under the Council of Australian Governments (COAG) agreement, states will receive an additional A$2.9 billion from July 2017 to June 2020, with growth in Commonwealth funding capped at 6.5%. A longer-term arrangement will then be put in place. In return, state and territory leaders agreed to improve the quality of health care to keep people out of hospitals and reduce the number of avoidable re-admissions.’

Split funding idea for schools has big risks and few clear benefits

‘Less than two days before meeting with the Premiers at the Council of Australian Governments (COAG), Prime Minister Malcolm Turnbull lobbed an innovative idea on the table. The Federal government would cease funding for public schools, but continue supporting non-government schools.

‘But the fact that an idea is innovative does not make it worthwhile. This proposal appears to be a response to a budgetary problem, not a way to improve educational outcomes. It is just not clear what educational problem it is intended to fix.’

Difference in a federal system should be cherished not feared

‘The knee-jerk response to the Turnbull Government’s proposed federalism reform is to complain that if the states controlled funding to their own schools, this could result in differences between the states, which is bad and unfair. On the contrary, Australia should be celebrating the prospect of difference, as it is through difference that we get improvement for all.’

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