Garnaut Fitzgerald Review of Commonwealth-State Funding

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Chapter 5: Specific Purpose Payments and Overall Payments to the States The following overview of seven major current SPPs illustrates their common features, including the Commonwealth’s imposition of restrictive conditions. The two largest are the Australian Health Care Agreement and Government Schools SPPs. The Australian National Training Authority Agreement and Commonwealth–State Housing Agreement demonstrate some problems with SPPs. The Supported Accommodation Assistance Program is an example of a relatively effective SPP agreement. Australian Health Care Agreement The Commonwealth and the States jointly fund public health services, which are delivered by the States through public hospitals. The Australian Health Care Agreement is the basis for the Commonwealth’s financial contribution to the States’ health care delivery, and makes up approximately 90 per cent of total health SPPs. The Commonwealth provides a range of smaller health SPPs, including funds for highly specialised drugs, national public health, essential vaccines, and blood transfusion services. The number and variety of payments and the range of conditions introduces problems of complexity and accountability that suggest there would be benefits in integrating related activities into a single program (i.e. broad-banding). The current agreement covers 1998–99 to 2002–03, and funds about 40 per cent of total expenditure on public hospitals. Funding is also provided for projects designed to improve the efficiency and effectiveness of health and emergency services provided by public hospitals including components for mental health, palliative care and National Health Development. To receive National Health Development funds, States must receive Commonwealth approval for strategic plans describing how the funds will be spent. The agreement is based on the following principles: • public hospital services are provided free of charge to people who elect to be treated as public patients • access to these services is on the basis of clinical need and within a clinically appropriate period • people have equitable access to public hospital services, regardless of their geographic location. There are no requirements for States to match Commonwealth funding. However, the SPP includes what is effectively a ‘maintenance of effort’ condition. In this case maintenance of effort is defined in output rather than input terms. States are required to provide public hospital services that, at a minimum, are equal to services provided by public hospitals in each State on 1 July 1998. This prevents States discontinuing the provision of services. A new condition introduced in the current agreement requires States to meet minimum targets on the number of admitted patients. Funding is adjusted each year for population growth and changes in composition (including the impact of population ageing), increasing hospital utilisation, the rate of private health insurance coverage and hospital cost increases. FINAL REPORT [66]
Chapter 5: Specific Purpose Payments and Overall Payments to the States Government Schools The States are responsible for funding primary and secondary education, while the Commonwealth supplements State funding to government schools so that they can provide educational programs directed towards achieving the Commonwealth’s schooling priorities. Commonwealth SPPs account for 12 per cent of government school funding. In 2001 the States negotiated a new SPP agreement for Commonwealth funding for schools, which makes funding available on a per-student basis for general recurrent purposes (e.g. teachers’ salaries), capital works and targeted programs (e.g. literacy programs for disadvantaged students). The Commonwealth has introduced tighter conditions in this latest agreement which runs from 2001–04. States are not required to match Commonwealth funding, but they must commit to the National Goals for Schooling in the 21st Century and achieve certain performance measures and targets. The Commonwealth Education Minister now has increased powers to regulate performance measures and targets under legislation. The first targets set through the regulations require all Year 3 students to meet national benchmarks in reading, writing, spelling and numeracy each year. If targets are not met, the Commonwealth Minister can require that funds be repaid and can reduce or delay future payments. Vocational Education and Training Under the Australian National Training Authority Agreement, the Commonwealth contributes to the funding of a national vocational education and training system. A new agreement was recently negotiated for 2001–03. The agreement commits the Commonwealth and the States, in partnership with industry, to work together to increase the participation of Australians in an integrated national vocational education and training system. State and Commonwealth Ministers for vocational education and training form a Ministerial Council which oversees the agreement. Each State submits an annual vocational education and training plan to the Council for approval before a State can receive Commonwealth funding. To receive growth funds States must comply with user choice policy and principles, and the vocational education and training plan must also satisfy Commonwealth requirements for an innovation strategy, additional State-sourced funding and for planned growth in total activity, including new apprentices. The Ministerial Council also approves the split of funds between recurrent, capital and national projects and the distribution of funds between States. Recurrent funding allocations are based on population shares, and capital funding allocations are based on historical analysis. Under the current agreement, each State must at least maintain its expenditure at the level of the year preceding the agreement, and commit to achieving an increase in the number of new apprentices. The Commonwealth provides additional funding on the condition that the States match this funding dollar for dollar from their own sources. FINAL REPORT [67]
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Review of Commonwealth-State Fundin
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Review of Commonwealth-State Fundin
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TABLE OF CONTENTS CHAPTER 9: Equity
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THE REVIEW COMMITTEE FINAL REPORT [
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EXECUTIVE SUMMARY Overall assessmen
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EXECUTIVE SUMMARY Each State would
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CHAPTER 1: Overview and Summary of
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Page 58 and 59: CHAPTER 4: Allocation of General Pu
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CHAPTER 8: Federal Policy Effects o
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CHAPTER 9: Equity Chapter 1 notes t
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CHAPTER 9: Equity Both SPPs and gen
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CHAPTER 9: Equity Table 9.3 shows t
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CHAPTER 9: Equity 9.3 Horizontal di
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CHAPTER 9: Equity Many ways to rais
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CHAPTER 10: Efficiency and Economic
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CHAPTER 11: Simplicity, Transparenc
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CHAPTER 12: Overall Assessment and
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CHAPTER 13: Commonwealth-State Fina
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APPENDIX A: National Health and Age
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APPENDIX A: National Health and Age
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APPENDIX B: National Education and
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APPENDIX C: National Indigenous Com
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APPENDIX C: National Indigenous Com
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APPENDIX D: Minimum Cost of Governm
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APPENDIX E: Consultation • Local
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APPENDIX E: Consultation • VICRoa
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GLOSSARY Efficiency: allocative eff
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GLOSSARY merit goods (health, educa
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FINAL REPORT [234] GLOSSARY
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BIBLIOGRAPHY Buchanan, JM 2001, Fis
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BIBLIOGRAPHY Government of Victoria
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BIBLIOGRAPHY Watts, RL 1999, Compar
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INDEX E economic activity / growth
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INDEX O other Federations Canada ·
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Garnaut Fitzgerald Review of Commonwealth-State Funding

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