A key objective of the Intergovernmental Agreement on Federal Financial Relations (the Intergovernmental Agreement) was a reduction in administration and compliance overheads. With its introduction in 2009, this agreement saw a rationalisation of the number of payments to the States, along with an increase in the overall quantum funding.
Any changes to Commonwealth-State financial architecture along the lines outlined above would represent a substantial change to the existing framework. The detailed design and ultimate implementation of any changes will be a complicated exercise that will take considerable time and effort.
In the meantime, however, steps need to be taken to vastly simplify the large number of existing Commonwealth State agreements.
As at 1 July 2013 there were 144 agreements in place under the Intergovernmental Agreement. See Chart 6.1.
Queensland has identified 19 intergovernmental agreements which are active, under development or recently expired, which together total only $33.4 million in funding.
Along with the administrative cost of developing the number of agreements, there is a growing reporting burden. The growth in the number of agreements has contributed to a significant growth in reporting and administrative expenses.
Furthermore, the Commonwealth has progressively moved back towards more detailed reporting arrangements in order that Commonwealth Ministers and the broader public can have certainty that taxpayers’ money was being spent efficiently and in the areas required.
However, an additional bureaucracy is required to develop, report on, review and assess the agreements, which takes resources away from service delivery and gives rise to second guessing and duplication.
Steps should be taken to immediately review all National Partnership Agreements with a view to rationalising their number. This would reduce the administrative burden for both Commonwealth and State governments.
At the same time, it would be useful to re-examine performance reporting requirements, along with broader data and transparency requirements. This could incorporate a review of the current role of the COAG Reform Council.
The COAG Reform Council has responsibility for reporting on the performance of governments against National Agreements and National Partnerships.
The COAG Reform Council is the independent monitor of performance of jurisdictions in fulfilling their responsibilities under the Intergovernmental Agreement. However, the COAG Reform Council is one of a growing number of national performance reporting bodies.
The Council of Australian Governments itself has often been criticised as being slow and unnecessarily bureaucratic, slowing down rather than facilitating reform processes. It has also been seen as overly focussed on short-term ‘announceables’ rather than longer-term reform goals.
There needs to be a balance between the appropriate level of reporting to achieve the accountability desired to assess outcomes and at the same time keep the flexibility and efficiency required for service delivery.
A more streamlined system built around a single, integrated, national reporting system would reduce data collection costs and confusion in interpreting performance. Governments need to better consolidate data, streamline and simplify systems and reporting to improve clarity and make government decision making more transparent.
If a substantial rationalisation of National Agreements and National Partnerships could be achieved, alongside a streamlining of reporting and data requirements, then the role of the COAG Reform Council would be substantially diminished.
The COAG Reform Council could then be abolished as a separate entity, with its reporting role assumed by the Productivity Commission (which already has a strong government reporting focus).
Recommendation 11: Reforming the Federation – Reducing the administrative burden
Steps need to be taken to simplify the large number of existing Commonwealth State agreements and associated reporting arrangements. The Commission recommends:
- the administrative burden between the Commonwealth and State governments be substantially reduced by rationalising the number of National Partnership Agreements and streamlining and reducing reporting requirements; and
- the COAG Reform Council could be abolished with its reporting role and staff moved to the Productivity Commission.