Federation reform hinges on keeping national cabinet

A plan by Scott Morrison to reform the Federation will most likely hinge on whether the state and territory leaders agree to keep the national cabinet after the coronavirus crisis abates.

Mr Morrison threw Federation reform on the table during his speech to the National Press Club on Tuesday as he outlined a strategy to drive the economic recovery.

It comes on top of tax and industrial relations reform, a shake-up of the vocational education sector, deregulation, and housing construction stimulus.

Tony Abbot was the last prime minister to attempt federation reform via a series of Treasury white papers, which looked at taxation as well as ways to reduce duplication between the states and the Commonwealth.

Malcolm Turnbull ended the process when he took over as leader in 2015.

Mr Morrison gave no detail at the Press Club speech as to his intentions and his office declined to elaborate on Wednesday.

It is understood, however, the Prime Minster is not interested in rekindling a white paper process but believes quick change can be agreed to through the national cabinet.

This is the body comprising himself and state and territory leaders which was established to co-ordinate the emergency response to the coronavirus crisis.

South Australian Liberal Premier Steven Marshall told ABC Radio National he was open to the prospect of Federation reform but "we need to see the detail''.

He said the national cabinet had worked well and "if there are opportunities to work on a new agenda (post coronavirus) ... then I think we would all be up for it.

"We are in a unique position at the moment where the national cabinet is working very effectively,'' he said.

Mr Marshall said the national cabinet should not supplant the more ponderous and bureaucratic Council of Australian Governments (COAG) because some issues were still best dealt with by bureaucrats.

"They're two different beasts,'' he said.

The government has long been pushing the states to adopt microeconomic reforms recommended in the 2017 Shifting the Dial report, a five-year review by the Productivity Commission.

Of its 28 recommendations, 22 are either the sole or joint responsibility of the states and include replacing property stamp duties with a land tax and replacing vehicle registration with road user charges.

Recommendations which include improving efficiencies or reducing duplication in health and education go directly to Federation reforms.

As does Mr Morrison's statement on Tuesday that the skills sector needs to be cleaned up. The system is wildly inconsistent across the different states and the Commonwealth tips in $1.5 billion a year without any accountability, transparency or targets.

Mr Morrison said he would be prepared to boost Commonwealth funding if the states adopted a uniform system which churned out the graduates that business needed.

He suggested the states adopt a system similar to the hospital funding the Commonwealth provides, which is activity-based and operates on an efficient price for each service.

"That is a system my government would be prepared to invest more in,'' he says.