National cabinet launches ambitious federation reform agenda

The funding of federal and state services is to be overhauled after the national cabinet gave Treasurers a wide mandate to remove duplication, overlaps and cost-shifting as the central pillar of a historic reform of the federation.

Prime Minister Scott Morrison announced that the nearly 30-year-old Council of Australian Governments would be abolished and replaced by a new National Federation Reform Council built around the national cabinet.

The full federation reform council will meet annually and will include representatives from the Australian Local Government Association and the Council on Federal Financial Relations (CFFR) – made up of federal and state treasurers.

The treasurers are expected to be the engine room for federation reform. They have been tasked with rationalising the plethora of national funding agreements that divvy up $127 billion of funds across a wide group of portfolios and functions.

This forum is expected to result in the widespread rationalisation of the roles and responsibilities of federal, state and local governments that have led to duplication, cost-shifting and often perverse administrative behaviours as governments gamed complex funding arrangements.

It is also expected to be where a push by NSW and Victoria for a review of stamp duty and payroll tax will be worked through, as part of a broader attempt to align state spending with a more stable revenue base.

The treasurers will report to the national cabinet, which is going to continue to meet every month after the COVID-19 crisis.

There will also be a series of top-level cross-jurisdictional ministerial cabinet committees focused on reform in seven priority reform areas.

These are rural and regional, skills, energy, housing, transport and infrastructure, population and migration and health.

These committees will take over the work of 19 ministerial forums and nine regulatory councils. Mr Morrison said these councils would be tasked to work as cabinet-like groups, rather than as large bureaucratic committees.

"Ministers will consider the value of each of those and I suspect we'll see many of them will no longer be required," he said

"It's important that ministers at state and federal level talk to each other but they don't have to do it in such a bureaucratic form with a whole bunch of paperwork attached to it."

Mr Morrison said important taskforces would continue in areas that were critical to the "national agenda".

"The taskforce on women’s safety and domestic violence will continue their critical work, as will the Indigenous affairs taskforce with a particular focus on Closing the Gap," he said.

Once a year, the National Cabinet, CFFR and the Australian Local Government Association will meet in person as the National Federation Reform Council with a focus on priority national federation issues such as Closing the Gap and Women’s Safety.

Mr Morrison said this new model would streamline processes and avoid endless meetings that did not result in action.

"This is a congestion-busting process that will get things done with a single focus on creating jobs," he said.

"We want to streamline those endless meetings so we can bring it back to one focus: creating jobs out of the back of this crisis and ensuring the federation is focused on that job.

"This is an exciting new agenda for our federation and is about rebuilding confidence to get Australians back into work."

He said the national cabinet would continue to work "with a laser-like mission focus on creating jobs as we come out of the COVID crisis and we work into the years into the future".