Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

My question is to the Prime Minister. Last week's GST distribution report highlighted the failure of a negotiated Commonwealth-state agreement on mining royalties and today the chair of the COAG Reform Council has raised a range of Commonwealth-state failures on reform. Prime Minister, I invite you to respond to both and to the underlying charge that Commonwealth-state reform processes have stalled, particularly in the area of tax reform for a better Australia.

Julia Gillard (Lalor, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the member for Lyne for his question. I am aware of the comments that were reported in today's newspapers. In response I want to say the following. The GST and its distribution between states is the subject of a great deal of commentary, and one's perspective tends to be defined on where one lives. People in Western Australia will take one view and people in Tasmania and the Northern Territory another. We certainly believe that it is important around the nation that Australians get a comparable level of services, that you should not have your life's chances through the schooling system at a lesser standard in one part of the country than in another part of the country because state and territory governments have different revenue-raising capacities and different types of economies. That is why we have a formula to redistribute the goods and services tax. But I understand that this is controversial in parts of our country and could benefit from a thoroughgoing review, and that review is in train now, led by, amongst others, two former eminent state leaders, Nick Greiner and John Brumby.

We are continuing to work strongly on Commonwealth-state reform. We moved as a government shortly after we were elected from a focus on inputs—for example, whether a school had a flag on a flagpole—to a focus on outcomes—whether or not we were actually changing the life chances of children. We have made some major steps forward not only in education but also more recently in health and, at the last COAG meeting, in skills and skills development. We are moving to a system that enables people to have an entitlement to the first qualification that makes a difference to their life chances and to a university style HEC scheme for the more expensive upper-end qualifications.

Reform between a federal government and state and territory governments is never easy. It requires dedication and focus. We are continuing to work strongly with our state and territory counterparts. I believe we have a proud track record of getting things done. Whether it is more than an extra $16 billion into health with a profound set of reforms or the most recent skills package, we will continue to work to get the big reforms done.

On the government's agenda for the balance of this year will be a focus on the National Disability Insurance Scheme and a focus on the work arising from the David Gonski review of school funding. So there is certainly more to do. There is more to do in the tax area as well. We are working, following last year's tax forum, with our state and territory colleagues on tax too.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

My supplementary question is to the Prime Minister. In light of your answer, will you reaffirm for the House exactly how you are now coordinating a negotiated agreement on state based royalties—as recommended by the GST panel last week and by Ken Henry at the start of this process—and how you are now coordinating a reduction in the sheer number of inefficient state taxes?

Julia Gillard (Lalor, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

To take the second part of the question first, arising out of last year's tax forum, a process commenced which involves the Deputy Prime Minister and federal Treasurer working with some state counterparts to identify inefficient state taxes and to commence discussion between the federal and state governments about them. To be fair to the states and territories, they have a limited tax base but there are concerns about the efficiency of some state taxes. That was work flowing from the tax forum last year in which the member participated.

On the question of royalties and the GST, the report we have received is the interim report. We will await the final report and respond to it at that point.