Prime Minister Tony Abbott has issued a call to the states to discuss how to fix the division of federal and state responsibilities and the tax take.
Prime Minister Tony Abbott wants to fix the “dog’s breakfast” of federation by resolving the mismatch between what states are expected to do and what they can afford.
He concedes he has changed his thinking on how federation reform is best achieved in the five years since he laid out his thoughts in his book Battlelines.
In 2009 he proposed constitutional change to make the states subordinate to the Commonwealth.
“I now doubt that any such constitutional change could succeed,” Mr Abbott said in the Sir Henry Parkes Oration he delivered in Tenterfield on Saturday night.
“(But) resolving the mismatch between what the states are supposed to deliver and what they can afford to pay for is worth another go.”
The states spend about $230 billion a year but only raise $130 billion from their own taxes and charges.
Mr Abbott said playing a “rule in, rule out” game would only generate fear but emphasised his government was determined to avoid increasing the overall tax burden.
Nevertheless, it was important to debate the division of government responsibilities and how to pay for them through the twin white papers on federation and tax reform.
Although he didn’t mention the GST by name, Mr Abbott said questions to consider included whether the states would accept responsibility for broadening its base.
“The Commonwealth would be ready to work with states on a range of tax reforms that could permanently improve the states’ tax base – including changes to the indirect tax base, with compensating reductions in income tax,” he said.
For any change to occur it was vital that negotiations were in good faith, with give and take on all sides.
An atmosphere of “rancid partisanship” would never lead to national questions being decided satisfactorily, Mr Abbott said.
Queensland Premier Campbell Newman backed Mr Abbott’s call, saying there were far too many overlaps in federal and state responsibilities.
Mr Newman said getting out of each other’s way would lead to more efficient and accountable government.
NSW Premier Mike Baird welcomed Mr Abbott’s support for federation and tax system reform.
“As I’ve made the point previously, the status quo in areas like health is not sustainable, as state budgets do not have the capacity to go it alone,” he said.