A modern Australian
federation

Working with the States, through COAG, the Government will bring financial relations between the Commonwealth and the States into the 21st century. COAG's reforms involve:

• rationalising more than 90 specific purpose payments (SPPs) into just 5 to 6 new national SPPs, without reducing overall funding
• mutually‑agreed objectives and outcomes, roles and responsibilities for each new SPP
• National Partnership (NP) payments to support the delivery of projects such as roads
• NP payments to facilitate or reward economic and social reforms

• on‑going SPPs with regular reviews of funding adequacy and policy objectives
• a new COAG Reform Fund to disburse NP payments to the States, including from the budget, the Building Australia Fund, the Education Investment Fund, and the Health and Hospitals Fund
• simpler, standardised and more transparent performance reporting
• flexibility for the States to efficiently deliver higher quality services, while ensuring they are accountable for the services they deliver.

The new framework will provide the foundation for a new era of economic and social reforms. COAG is developing an ambitious reform agenda, to be agreed by the end of 2008, covering:

• health and ageing
• education, skills and training
• climate change and water
• infrastructure
• business regulation and competition
• housing
• Indigenous disadvantage.

In 2008‑09 the States will receive $78.6 billion in total payments from the Commonwealth, an increase of 4.8 per cent over 2007‑08.