Australia’s federal financial relations are characterised by shared roles and responsibilities that have accumulated over time.
Shared roles and responsibilities increase the risk of administrative duplication and overlap and result in higher administrative costs, blurred accountability, opportunities for cost shifting, a reduction in the efficiency, effectiveness and equity in the delivery of services and ultimately, services not being provided in a manner that improves the wellbeing of Australians.
Chart 8.2.1 below shows that there are currently very few areas where the Commonwealth or State governments are solely responsible for funding or providing services.
Chart 8.2.1: Expenditure by function, 2011-12
Source: Australian Bureau of Statistics, 2012.
Key areas where overlap or duplication has been identified by the States in their submissions to the Commission include:
- The National Health Reform process is currently seen as unnecessarily complex and inefficient. The Victorian Government has asked that a review look at enhancing efficiency by simplifying funding arrangements and reviewing the roles of administrators and regulators (Victorian Government, 2013).
- The ACT Government believes there is an opportunity for the Commonwealth to step back and allow States to flexibly operate schools (ACT Government, 2013).
- Recent interventions by the Commonwealth in service delivery of mental health risk duplication of effort and distortion of service planning. The NSW Government proposes an examination of duplicate structures (NSW Government, 2013).
Other areas of Commonwealth-State overlap and duplication identified are included in the main body of the Phase One Report at Section 3.1.
A thorough review of roles and responsibilities across levels of government would provide the opportunity to reduce overlap or duplication and produce considerable efficiencies in service delivery.
In line with the Commission’s Principles of Good Government, two key principles should apply to any review of Commonwealth-State roles and responsibilities – subsidiarity and sovereignty.
- Subsidiarity - As far as practicable, policy and service delivery should be devolved to the level of government closest to the ultimate clients, to allow programmes to be tailored to meet community needs. Governments should operate at their natural levels (policy oversight for national issues should go to the Commonwealth and regional and local issues should go to the State governments).
- Sovereignty – As far as practicable, each level of government should be sovereign in its own sphere. When reviewing roles and responsibilities, government activities should be allocated to one level of government only, in order to provide greater clarity and accountability.
Any changes to roles and responsibilities should not result in major changes to the level of service currently provided to the public.
The involvement of the States in any review of roles and responsibilities will be critical, as most meaningful reforms will require the Commonwealth and State governments to work together to allocate the appropriate service provider and level of funding, and to sell the solutions to the broader public.
Key areas where roles and responsibilities should be reviewed are:
- areas of constitutional State responsibility where the Commonwealth currently has a significant financial contribution, such as schools funding;
areas of State responsibility where the Commonwealth currently has sub-sectoral responsibilities, such as responsibility for specific environmental outcomes and regulation;
- areas of State responsibility where the Commonwealth currently has a national policy interest, such as infrastructure; and
- areas where Commonwealth transfers to the States are growing at an unsustainable rate, such as the payments associated with National Health Reform and the National Disability Insurance Scheme, which currently have growth rates well above inflation.
In areas where the intersection of roles and responsibilities is inevitable, they should be made complementary and carefully managed to avoid duplication and waste.