Helen Coonan (NSW, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Hansard source

I must say, with respect to the previous bill, which we supported and were very pleased to support, that it had a gestation going back to 1992. The mischievous side of me was inclined to vote against it just to liven it up a bit! However, I restrained myself.

With great pleasure, I now address the Federal Financial Relations Bill 2009 and the Federal Financial Relations (Consequential Amendments and Transitional Provisions) Bill 2009. We will be supporting these bills. The Federal Financial Relations Bill 2009 appropriates funds to provide financial assistance to the states by implementing COAG’s Intergovernmental Agreement on Federal Financial Relations through general revenue assistance, including GST payments, national specific purpose payments and national partnership payments. The Federal Financial Relations (Consequential Amendments and Transitional Provisions) Bill 2009 makes amendments and repeals parts of five acts, consequent on the first bill, and also repeals the Health Care (Appropriation) Act 1998.

The stated objectives of the bills are simplicity, accountability, certainty and improved service provision. The Treasurer has proclaimed the bills as ‘a new direction’ for federalism, but the changes are less radical than claimed. The coalition, for example, can point to the introduction of the GST as a far more significant event in securing a funding base for the states.

The Commonwealth committed to provide financial support to the states through having GST payments distributed in accordance with the principle of horizontal fiscal equalisation, which always sounds painful to those who might not otherwise understand its meaning; through other general revenue assistance, to be paid monthly; through national specific purpose payments to service delivery in health care, schools, skills and workplace development, disability and affordable housing; and through national partnership payments to reward those states which best deliver services and outcomes. These four means of funding are provided for in the bills. Their financial impact is $6.3 billion over the five years from 2008-09 to 2012-13.

In relation to the national partnership payments, this is a departure from the needs based principle of horizontal fiscal equalisation, which is, however, retained for GST payments. The bills promise greater simplicity by collapsing more than 90 existing specific purpose payments into five national specific purpose payments. These payments will also be subject to reporting against performance indicators. The national partnership payments, which will include project, facilitation and reward payments, may well become quite complicated and offset the simplicity arising from reducing the number of specific purpose payments.

The states have agreed to the proposed arrangements, and the new arrangements are to commence on 1 April 2009. Whilst the coalition will support these two bills and we do understand the policy intent behind them, we do want to place on record and make it very clear that we will be watching and monitoring the implementation and effectiveness of the new system to ensure it actually works as the government claims it will and as it is intended to. I do not propose to go into a long speech about it. I think we will just have to see how it goes. We will be supporting the legislation on the basis that we will be monitoring its effectiveness. I commend the bills to the Senate.