WHICH LEVEL OF GOVERNMENT?

THE INTERFACE BETWEEN THE COMMONWEALTH AND THE STATES

4 WHICH LEVEL OF GOVERNMENT? INTERFACE BETWEEN THE COMMONWEALTH AND THE STATES


KEY FINDINGS

KEY RECOMMENDATIONS

Key recommendations in specific sectors

Health and health related services

Education

 

Services to Aboriginals and Torres Strait Islanders

Family services

Housing

Environment

Regional development

Workers compensation

Industrial relations

Other Specific Purpose Payments (SPPs)

4

WHICH LEVEL OF GOVERNMENT?

THE INTERFACE BETWEEN THE COMMONWEALTH AND THE STATES

The Commission is required to report on the effectiveness and efficiency of current service delivery arrangements between the Commonwealth and the States.

The terms of reference require the Commission to focus on identifying duplication, overlap and cost shifting between the Commonwealth and the States in delivering services and to recommend measures needed to promote more efficient service delivery, having regard to the need to improve outcomes for clients and value for money for taxpayers. The Commission is also required to examine the appropriate roles of the Commonwealth and the States, the relationship between service funder and service provider and the scope for contestability in service provision.

Some examples of areas where the Government's role should be reviewed have been addressed in chapter 3. This chapter looks at programs which require public sector involvement and considers the level (Commonwealth, State or local government) at which this involvement is most appropriate.

Section 4.1 presents a brief overview of current arrangements.

Section 4.2 reviews inefficiencies and costs of overlap and duplication arising from these arrangements.

Section 4.3 discusses the appropriate role of the Commonwealth.

Section 4.4 develops some specific principles for reducing duplication overlap and cost shifting.

Section 4.5 briefly discusses the application of the principles identified in this chapter and in chapters 2 and 3.

The remaining sections of this chapter (4.6 to 4.14) briefly describe the delivery arrangements in the areas of health, education, services to Aboriginals and Torres Strait Islanders, family services, housing, the environment, regional development, workers compensation and industrial relations.

It should be noted that in the time available, the Commission has not had the opportunity to examine fully the often complex policies underlying the programs involved. Nevertheless, within this constraint, for each of these areas the Commission develops key findings and recommends how improvements in the efficiency and effectiveness of delivery could be achieved.

4.1 CURRENT ARRANGEMENTS

The roles of the Commonwealth and States in service provision have been developed and shaped over time by constitutional change, political pressures, intergovernmental agreements and the financial arrangements between the Commonwealth and the States.

Primary roles

The Commonwealth's primary role in service delivery has been to provide cash benefits to individuals to assist them in purchasing various services; for example, medical and pharmaceutical benefits, Austudy and childcare. In these areas the Commonwealth has set rates and conditions governing access to benefits that apply nationally.

In addition to providing cash benefits, the Commonwealth has used its power under section 96 of the Constitution, 'to grant financial assistance to any State on such terms and conditions as the Parliament thinks fit' to influence both program design and the amount of resources allocated by States to certain services.

The States' primary role in service delivery has been to provide services (for example, hospitals and schools) or, less often, to contract private providers to provide the services on behalf of the State (for example, third party insurance, bus services and hospital services).

Financial arrangements

The Commonwealth raises more revenue than it spends on its own programs. It funds around half of State budgets through grants to the States in the form of general purpose payments and specific purpose payments.

General purpose payments do not have to be spent on specified services or functions and are therefore known as 'untied' grants. Specific purpose payments are required to be spent on specific services and functions according to terms and conditions agreed between the Commonwealth and the States, and are known as 'tied' grants.

General purpose payments are estimated at $15.9b in 1995-96, while specific purpose payments are estimated at $18.3b.

The proportion of specific purpose payments to general purpose payments has been rising over the last decade. Around 70 per cent of specific purpose payments are directed to education and health.

Commonwealth Grants Commission

The total amount of financial assistance grants paid by the Commonwealth to the States is determined on an annual basis at the Premiers Conference.

The distribution of the amount determined at the Premiers Conference is based on the recommendations of the Commonwealth Grants Commission. The recommendations relate to a set of 'per capita relativities' which are factors applied to State populations to give weighted population shares, and the total grant is then distributed in accordance with the weighted population shares.

To achieve this result the Grants Commission undertakes a significant amount of research to obtain its data and extensive discussion with the States to guide its interpretation of the data provided. The system is extremely complex, difficult to understand and consumes considerable Commonwealth and State resources.

The running costs of the Grants Commission alone are estimated to be $4.5m in 1995-96.

Accepting that in the context of financial arrangements for the Australian federation there is a need for a mechanism to impose fiscal equalisation, the question arises whether this can be achieved by a simpler and less costly means than a full time permanently staffed Commission.

An alternative to the current approach may be to develop a set of simpler indicators which can be agreed by the States and applied without the need for dedicating the current level of resources.

Recommendation 4.1: Simplifying the fiscal equalisation process

The Commonwealth should approach the States with a view to developing a simplified set of indicators for determining per capita relativities which would not need the current level of administrative resources to construct and apply. These indicators should be reviewed every five years.

Council of Australian Governments

In February 1994 the Council of Australian Governments (COAG) agreed that, in clarifying the roles and responsibilities of governments in the delivery of services, the overriding objective should be to improve outcomes for clients and value for money for taxpayers.

Specific Purpose Payments

The following table lists the full range of specific purpose payments for 1995-96. There are 87 such payments listed, some of which are aggregations of a number of smaller payments.

Table 4.1: Total specific purpose payments to the States 1995-96 (classified by function)

  $m
EDUCATION  
State Contribution to Higher Education Superannuation (47.4)
Government Schools 1,151.7
Targeted Government Schools & Joint Schools Programs 229.4
Aboriginal Education Strategic Initiatives Program 52.7
Advanced English for Migrants 5.1
SUB TOTAL 1,391.5
HEALTH  
Health Program Grants 40.3
Transfer of Pathology Laboratory 30.4
Dental Health Program 105.8
Transfer of Repatriation General Hospitals 33.1
Veterans' care via community-based facilities in Victoria 1.1
Base Medicare 3,806.8
Other Medicare 818.9
Magnetic Resonance Imaging 19.7
Medical Specialty Centres 1.0
Highly Specialised Drugs Program 98.9
Youth Health Services 2.6
National Program for Early Detection of Breast Cancer 38.3
Funds to Combat AIDS 28.5
Drug Education Campaigns 22.1
Blood Transfusion Services 55.3
Aged Care Assessment 38.2
Home and Community Care Program 423.8
National Childhood Immunisation 15.1
Cervical Cancer Screening 5.9
National Mental Health 29.9
Artificial Limbs Scheme 8.5
Medicare related 65.5
Other health 11.4
SUB TOTAL 5,701.2
SOCIAL SECURITY & WELFARE  
Disability Services 299.9
Children's Services 53.4
Supervision and Welfare Support - Refugee Minors 0.4
Fringe Benefits to Pensioners 131.2
Mortgage and Rent Assistance 30.9
Crisis Accommodation Assistance 46.9
Supported Accommodation Assistance Program 137.6
Supported Accommodation Assistance Program - Reform Funds 6.0
Native Title 9.0
SUB TOTAL 715.4
HOUSING & COMMUNITY AMENITIES  
Pensioner Housing Grants 49.8
Housing Assistance for Aboriginals 97.10
CSHA Block Assistance 762.90
Community Housing Program 74.4
Other assistance for housing 5.5
Social Housing Subsidy Program 6.0
WA Sewerage and Waste Water 0.4
Remote Sensing Land Coverage 1.6
ACT Assistance for Water & Sewerage 7.60
SUB TOTAL 1,005.2
RECREATION & CULTURE  
National Estate Grants Program 5.0
Management of World Heritage Properties 11.20
Daintree Rescue Package 4.4
Sugar Coast Environment Rescue Package 2.0
SUB TOTAL 22.7
FUEL AND ENERGY  
Electricity Grid Infrastructure 1.8
SUB TOTAL 1.8
AGRICULTURE, FORESTRY AND FISHING  
Tasmanian Wheat Freight Subsidy 2.7
Tasmanian Wheat Freight Subsidy - Capital 1.50
Bovine Brucellosis and Tuberculosis Eradication 9.70
Exotic Disease Eradication 0.3
Sugar Industry Infrastructure 8.6
Rural Adjustment Scheme 196.2
National Landcare Program 86.5
Forestry Development 16.1
SUB TOTAL 321.5
MINING, MANUFACTURING AND CONSTRUCTION  
Rum Jungle monitoring and maintenance 0.1
Enterprise Development Program 27.5
Enterprise Networks Program 0.1
Technology Access Program 2.0
Multifunction Polis 3.0
SUB TOTAL 32.8
TRANSPORT AND COMMUNICATION  
Interstate Road Transport 15.0
Roads 830.9
Bass Strait Passenger Service Fuel Subsidy 0.4
Strategic Roads on Aboriginal Land Initiative 5.2
SUB TOTAL 851.6
OTHER ECONOMIC AFFAIRS  
Pre-Vocational Places Program 50.2
Employment Training - Aboriginal 5.9
SUB TOTAL 56.1
PUBLIC ORDER AND SAFETY  
Legal Aid 147.5
SUB TOTAL 147.5
NOT ALLOCATED TO FUNCTION  
Debt Retirement Reserve - Commonwealth Contribution 22.8
Debt Redemption Assistance 68.7
Compensation - Companies Regulation 126.4
Natural Disaster Relief and Restoration 33.0
Tax Compensation - Sale of State Assets 200.0
ACT National Capital Influences - Municipal Services 18.8
South Australian Special Assistance Package 77.4
Grants in Lieu of Royalties 157.5
Assistance for Wholesales Tax Exemption - QLD & WA 0.0
Capital Works Assistance for Sydney 2000 Olympic Games 50.0
SUB TOTAL 754.7
   
PAYMENTS TO THE STATES - TOTAL 11,001.9
 
PAYMENTS THROUGH THE STATES  
Higher Education 3,927.2
Non-government Schools 1,737.5
Research at Universities 355.7
Targeted Programs Non-Government Schools 95.8
Financial Assistance for Local Government  
    - General Assistance 806.8
    - Identified Road Funding 358.0
TOTAL 7,281.0
TOTAL SPECIFIC PURPOSE PAYMENTS 18,282.9


Source: Department of Finance, Catalogue of Specific Purpose Payments to the States and Territories 1995-96, AGPS, Canberra, February 1996.

4.2 INEFFICIENCIES AND COSTS OF OVERLAP AND DUPLICATION

In their joint submission to the Commission, the States have identified inefficiencies and costs of the current arrangements, including the following:

4.3 APPROPRIATE COMMONWEALTH ROLE

The Commission considers that basic principles should apply for the allocation of roles and responsibilities between two levels of government. In summary, these principles are that:

4.4 REDUCING DUPLICATION, OVERLAP AND COST SHIFTING

The following amplifies the broad framework of principles set out in chapter 2. This section is intended as a guide to the formulation of proposals to reduce duplication, overlap and cost shifting where it is found.

Duplication and overlap

Reducing program duplication and overlap simply requires a clear delineation between levels of government as to program responsibility.

Ideally, elimination of duplication and overlap would require complete responsibility for a particular program to lie with one level of government only.

Where this can be achieved, effective and efficient program delivery is more likely. In general, the prospects of success may depend on whether different levels of government can agree about which level should take complete responsibility for the program.

For some programs, it may be considered impractical to cede responsibility entirely to one level of government. For example, in some areas the Commonwealth may be required to set and monitor national standards, with the States delivering the program services in line with the required standards.

In such cases, optimal arrangements may involve clear purchaser/provider delineation where that is practical. For example:

In such cases, some Commonwealth/State consultation and interaction will be unavoidable.

One problem in such cases is that program standards cannot be determined without regard for costs of delivery. That leads to pressure for State involvement in standard setting or requests for additional Commonwealth funding to cover program costs. It may also lead to Commonwealth involvement in the 'nuts and bolts' elements of program delivery in order to verify costs. Under such pressures, roles become blurred, probably increasingly so over time.

There is no easy solution to this problem.

The best option, where practicable, is to avoid multiple levels of government involvement in the first place.

In the Australian context the reality is that the roles and responsibilities of the Commonwealth and States cannot be easily separated. This is largely because the Commonwealth has control of most of the revenue available to governments and because the political opportunities for expanding Commonwealth involvement flow directly from this.

Recommendation 4.2: Multiple levels of government

All programs involving multiple levels of government should be closely scrutinised. In all such cases, the justification for multiple levels of government involvement should be critically reviewed.

In conducting a review of programs involving multiple levels of government, the following questions need to be addressed:

Cost shifting

Even if the problems of duplication and overlap for particular programs could be eliminated, the problem of cost shifting remains. Indeed, program specific separation of responsibilities, even if completely effective, in some cases can intensify cost shifting between levels of government.

In particular, where program services are close substitutes in terms of demand, and such programs are spread across different levels of government, cost shifting can be encouraged. For example, while most public sector health related programs (mainly delivered by the States) have capped funding and are therefore subject to binding budget constraints, the Commonwealth's Medicare Benefits Scheme (MBS) and Pharmaceutical Benefits Scheme (PBS) programs are effectively uncapped entitlement schemes as a matter of bilateral government policy. Facing binding budget constraints on their own programs (such as public hospitals) the States have effectively forced consumers of health services to switch into MBS and PBS programs, thereby shifting costs to the Commonwealth.

Such problems reflect allocation of related programs across different levels of government. This design defect facilitates cost shifting, and incentives to engage in such practices can be reinforced by funding pressures that may be perceived as arising from present Commonwealth funding arrangements.

Program design principles for reducing cost shifting

In general, the following principles should guide allocation of specific program responsibility if cost shifting is to be minimised:

Commonwealth/State funding arrangements

The way the Commonwealth Government provides funding to the States is an important issue, with profound effects on the Commonwealth/State interface.

In this respect the following general principles should apply to funding arrangements:

Recommendation 4.3: Programs transferred to the States

Recommendation 4.4: Retained specific purpose payments

Where SPPs are retained they should be subject to the same efficiency requirements as those specified in chapter 5. That is, their administration component should be reduced by a minimum of 10 per cent.

Recommendation 4.5: National policy bodies

Any national policy bodies that are retained should limit their activity to joint work on national coordination and strategic directions and the development of standards, benchmarks and performance measures. They should not be involved in service delivery or approval of projects.

4.5 APPLICATION OF THE PRINCIPLES

In reviewing particular programs where there is a Commonwealth/State interface the Commission has relied on the principles outlined in this chapter and on the general principles it has adopted in relation to the Commonwealth's own areas of program delivery in chapters 2 and 3.

Specifically, the Commission has used these principles to consider the appropriate role of the Commonwealth and the States in the areas of health and health related services, education, services to Aboriginals and Torres Strait Islanders, family services, housing, the environment, regional development, workers compensation and industrial relations.

Health and its related services is the most complex sector.

4.6 HEALTH AND HEALTH RELATED SERVICES

Appendix C provides a more extensive discussion of the issues and principal approaches to reform in this sector.

Summary of arrangements

Australia's health care system is complex and loosely organised, with responsibilities for care split between the Commonwealth Government and State Governments, and services provided in both the public and private sectors.

Over the last two decades per capita health expenditure in real terms has increased at an annual average rate of 2 per cent. The increase has been about 3 per cent per annum in real terms over the last three years. Health expenditure has risen from 5.6 per cent of GDP in 1970-71 to its current level of 8.4 per cent of GDP.

Over the period 1995-96 to 1999-2000, Commonwealth outlays on health are expected to grow from $18.6b to $23.1b, a real annual average growth rate of 2.4 per cent. Within this overall growth, Commonwealth outlays for its own health related purposes are expected to grow at a real annual average rate of 3.3 per cent. Uncapped MBS and PBS growth is the driving force. Specific purpose health payments to the States, the funding for which is capped, are estimated to grow at a real annual average rate of 0.1 per cent.

The States are responsible for providing most health care services in the public sector, including hospital services, mental health, dental health, extended care and medical rehabilitation, health promotion, and a full range of primary care (including allied health services) in public hospitals. Funding comes from their own revenues, from the Commonwealth through general purpose grants and specific purpose grants, or from their own borrowings. State public hospitals also receive a significant income stream from insured and uninsured private patients.

The Commonwealth provides significant levels of subsidy to assist people requiring treatment from private sector doctors, pharmacists, and nursing home and hostel proprietors. The Commonwealth also contributes to the operating costs of some State run health services. Commonwealth expenditure under the major health and aged care programs in 1994-95 was:

Funding under the MBS provides a subsidy to patients for treatment by both general practice and specialist doctors out of hospital and for private patients in hospital. This program is demand driven and the States do not contribute to it.

Funding under the PBS provides a subsidy to people purchasing pharmaceuticals, and also incorporates a safety net for high users. This program is demand driven and the States do not contribute to it. However, the States, through their public hospitals, are significant separate purchasers of pharmaceuticals.

Funding under HFGs contributes to the operating costs of hospitals. These Medicare hospital agreements promote the Commonwealth's aims of ensuring free universal public hospital services. HFGs are capped and the Commonwealth is not exposed to variations in demand for hospital services.

Funding for nursing home and hostel services ($2.2b), which is the largest element of expenditure in the aged and community care programs area, is controlled through planning limits on the number of nursing home and hostel beds per thousand of population aged seventy years and over. Entry to nursing homes and to hostels is controlled by formal assessment by aged care assessment teams.

Other allied health services (for example optometry, dentistry and physiotherapy), are funded to a limited extent by the Commonwealth and the States, with the majority being provided by private practitioners.

In April 1995 COAG agreed to a process of major structural reform of health and community services. This process has led to the implementation of a number of trials of coordinated care for people with ongoing and complex care needs, which will test both the funding arrangements and the health outcomes possibilities of a range of new health delivery models.

On 1 May 1996 the Minister for Health and Family Services announced the Commonwealth position for the next round of COAG discussions. This position has the following elements:

Findings

Recommendations

Recommendation 4.6: Renegotiation of Commonwealth and State agreements

Existing Commonwealth/State arrangements should be renegotiated through the COAG process to transfer responsibility for the delivery of health and health related services to the States, but ensuring an ongoing role for the Commonwealth in developing and setting national strategic directions for health policy, standards and benchmarks.

Recommendation 4.7: Devolving programs

In particular, administration, funding and service delivery of aged care, health promotion and prevention and health support services should be devolved to the States, subject to appropriate specification of, and agreement to, the outputs and outcomes required.

Recommendation 4.8: Controlling health outlays

Initiatives should be developed, within the broad Medicare framework, to control overall health outlays and share financial risk between the Commonwealth, the States and service providers (for example, through bilateral arrangements incorporating global funding, which reduce duplication, overlap and incentives to shift costs).

Recommendation 4.9: Regulatory duplication

Regulatory duplication in areas such as pathology services, nursing homes, neo-natal intensive care and private hospitals should be avoided.

Recommendation 4.10: Price signals and utilisation incentives

The application of price signals should be expanded to reduce unnecessary use of health services, in particular in those areas where the information asymmetry is not large and the measurement of the outcome of most treatment is possible, for example, general practitioner consultations.

Recommendation 4.11: Purchaser/provider arrangements

Within the framework of the reforms, consideration should be given to purchaser/provider arrangements to enhance provider competition and consumer choice, with budget holders being established to encompass a range of health and health related services, for example, the Department of Veterans Affairs' arrangements for purchase of hospital services for veterans.

Recommendation 4.12: Aged care reforms

The following arrangements should be introduced prior to the devolution of aged care services to the States to provide the optimal conditions for the operation of purchaser/provider and budget holding arrangements:

Recommendation 4.13: MBS and PBS growth

With a view to preparing the ground for reform and rebalancing health financing, the Commonwealth should contain growth in MBS and PBS outlays by adopting measures to reduce unnecessary use. One such measure would be a system of means tested co-payments aimed at preserving the current access to medical and pharmaceutical services by those deemed disadvantaged or in need of full government assistance, but which leaves those who can afford it to bear some of the cost of their access to medical and pharmaceutical services.

Recommendation 4.14: Contestability in delivery of pharmaceutical and diagnostic services

Contestability in retail pharmacy should be improved by allowing non-pharmacists, including large retailers such as supermarkets, to own pharmacies dispensing PBS drugs and by allowing pharmacists to own an unrestricted number of pharmacies.

Contestability in the provision of diagnostic services should be introduced by moving to competitive tendering for pathology and radiology services, including allowing public hospitals and other public diagnostic facilities to tender for the provision of services.

Recommendation 4.15: National payments agency

The Commonwealth should seek agreement with the States that the Health Insurance Commission become a national payments agency with authority to draw from a Commonwealth/State funding pool, to collect and analyse payment and service data, and to establish a client record data base protected by appropriate privacy provisions.

Recommendation 4.16: Blood products

Pricing mechanisms should be introduced relating to the distribution and use of blood products.

4.7 EDUCATION

Summary of arrangements

Over the period 1995-96 to 1999-2000, Commonwealth expenditure on education is expected to grow from $10.7b to $12.4b, a real annual average growth rate of around one per cent.

Schools

Expenditure by all levels of government on schools rose from 2.8 per cent of GDP in 1972-73 to 3.6 per cent in 1983-84, but then declined to 2.8 per cent of GDP in 1993-94.

During this time, the Commonwealth's share of government spending on schools rose from 11 per cent in 1972-73 to 24 per cent in 1983-84 and 30 per cent in 1993-94, while the States' share declined from 89 per cent in 1972-73 to 76 per cent in 1983-84 and 70 per cent in 1993-94.

The States have a constitutional responsibility to provide education to all children of school age. Government schools are the responsibility of State Governments. Non-government schools operate under conditions determined by State government registration authorities. About 70 per cent of school students attend government schools. The balance attend non-government schools.

Funding of government schools is shared between the States and the Commonwealth. Commonwealth general recurrent and capital grants, currently around $1.2b, represent about 12 per cent of total spending on government schools. The balance is provided by State Governments.

The Commonwealth provides substantial funding to non-government schools. Some $1.8b, about 38 per cent of total income for non-government schools, is provided by the Commonwealth. The balance comes from other governments (18 per cent) and private sources (44 per cent).

Post School Education

The roles of the Commonwealth and the States in post school education are divided by sector. The Commonwealth has responsibility for the funding of the higher education sector ($4.8b in 1995-96). The Commonwealth and States share responsibility for funding of the Vocational Education and Training (VET) sector. The States provide around 70 per cent of the funding, the Commonwealth about 30 per cent. In 1996 total government expenditure on vocational education and training under the National Vocational Education and Training Agreement is estimated to be some $2.8b.

The Commonwealth and the States agreed to the establishment of a national VET system in 1992. This agreement was formalised under the Australian National Training Authority Agreement.

Overlap and duplication

In their submission the States have identified many inefficiencies and costs of the current arrangements, including the following:

Findings

Recommendations

Recommendation 4.17: Delineate funding and roles

The Commonwealth should negotiate the following delineation of roles with the States:

Recommendation 4.18: Scholarships

The Commonwealth should fund VET and higher education by way of a fixed number of scholarships to students finishing year 12, in two separately identifiable tranches for universities and TAFEs. These would be redeemable at any accredited institution.

Recommendation 4.19: Vocational course grants

Students who leave school earlier than year 12 and wish to undertake a vocational course should apply for assistance under labour market training programs of the Department of Employment, Education, Training and Youth Affairs. Where appropriate these grants should be administered in much the same way as the scholarships described above supplemented when necessary with a 'HECS type' loan arrangement.

Recommendation 4.20: Level of funding

Funding through scholarships (see recommendation 4.18) should replace all operating grants to universities and TAFEs. Institutions would be required to budget, plan and manage their total resource needs from revenues from the scholarships, HECS, student fees and other commercial revenues or bequests.

Recommendation 4.21: Efficiency in administration of Universities and TAFEs

The same requirements for achieving efficiencies in administration should be applied to universities and TAFEs as are required of government departments.

Recommendation 4.22: Interface with TAFE

The school sector, government agencies and businesses should purchase VET modules from the TAFE sector as required.

Recommendation 4.23: Fees

Vocational education and training institutions and universities, including accredited institutions, should be permitted to determine and charge fees.

4.8 SERVICE DELIVERY TO ABORIGINALS AND TORRES STRAIT ISLANDERS

Summary of arrangements

Responsibility for programs for indigenous people is widely dispersed and generally is a supplement or substitute for spending in mainstream programs.

Table 4.2 indicates the areas where specific Commonwealth program spending on services for Aboriginals and Torres Strait Islanders occurs and the areas where there are significant competing or complementary State programs.

Table 4.2: Broad pattern of spending in indigenous programs

Functional area ATSIC and other indigenous agencies $m Other Commonwealth agencies $m Significant State specific programs
Housing/Infrastructure/Hostels 310 95 Yes
Employment/Training/Education 360 315 No(a)
Health - 120 Yes
Land/Culture 130 20 Yes
Other 120 40 Yes
ATSIC Administration 140 0.00 N/A
Total 1,060(b) 590  

Source: Department of Finance.

(a) Other than some specific programs in schools.

(b) Variation from budget outlays figures due to agency revenues.

Commonwealth spending on programs specifically directed to indigenous clients (an estimated 283,000 people in the 1991 census) has grown from $484m to $1,625m over the past decade at a real average annual rate of 12 per cent.

The supplementary nature of the programs complicates lines of responsibility and accountability for outcomes.

Commonwealth funding on specific service programs for Aboriginals and Torres Strait Islanders is expected to grow from some $1.6b in 1995-96 to $1.8b in 1999-2000, representing real growth of some 1.3 per cent a year.

Findings

General services

The need for greater efficiency and effectiveness in the delivery of services to Aboriginal and Torres Strait Islanders is broader and more pervasive than that arising from overlap and duplication with the States. This demands more fundamental review which is beyond the Commission's terms of reference.

National Native Title Tribunal

An example of overlap and duplication

Table 4.3: Applications by Aboriginal and Torres Strait Islanders approved for legal aid and as a proportion of total applications approved for all persons

State Aboriginals Applications Approved Percentage of Total Applications
NSW 1163.00 2.80
VIC 604.00 1.50
QLD 1742.00 8.20
SA 692.00 4.50
WA 737.00 9.30
TAS 114.00 1.60
ACT 16.00 0.60
NT 72.00 5.70
TOTAL 5140.00 3.80

Source: Legal Aid and Family Services, Attorney-General's Department.

Figure 4.1: Legal aid organisations in Queensland


 

 

 

 


 

 

 

 

 

 

 

 

Source: Legal Aid and Family Services, Attorney-General's Department.

Recommendations

Recommendation 4.24: Service delivery

While not reducing the need for a more fundamental review, service delivery to Aboriginal and Torres Strait Islander people should be improved by:

Recommendation 4.25: Funding

Funding should be provided for ATSIC on the basis of an agreed set of outputs which ATSIC would purchase from appropriate providers with clear lines of responsibility for delivery and accountability.

Recommendation 4.26: Native title process

The Commonwealth should explore with the States options for a less expensive native title determination process. Such a process would need to give both the States and the claimants more certainty and reduce the time involved in resolving claims. The aim should be to re-establish certainty of land tenure as soon as practicable after the scope of common law native title is settled by the courts.

Recommendation 4.27: Legal aid

Duplication and overlap between ATSILS and mainstream legal aid delivery should be removed by amalgamating ATSILS with Legal Aid Commissions. Under this system:

Recommendation 4.28: Improving program accountability and outcomes

Similar processes of review and reform should be applied to other significant indigenous specific programs, with a view to maintaining an appropriate degree of self determination and self management while improving program delivery and accountability for outcomes.

4.9 FAMILY SERVICES

Summary of arrangements

There are over 70 programs within 16 Commonwealth agencies delivering services to families. In addition, a further 13 programs deliver services to youth that are of relevance to families. Many of these programs are major programs in areas such as Education (Austudy) or Social Security and Welfare (Family Payment). These cash benefit programs are not duplicated by programs of the States.

There are large areas of services for families where apparent overlap occurs. Table 4.4, reproduced from a submission from the Adelaide Central Mission, shows the range of family counselling services provided to families by Commonwealth and State agencies and the degree of overlap between them. They have different funding and reporting requirements. Table 4.5 identifies some areas of Commonwealth family support activity which appear to overlap with State services for families.

Commonwealth and State roles also overlap in the areas of preschool and the regulation of childcare. In both areas there is some cost shifting and transfer of financial liability to the Commonwealth.

Another area of family support where Commonwealth and State roles overlap is in the area of concessions to low income households. Commonwealth decisions in recent years to extend the eligibility for health care cards and the pensioner health benefits card have increased the number of people eligible for concessions from the States. Following the April 1993 decision to extend the eligibility of the pensioner health benefits card, the Commonwealth agreed to share with the States the cost of providing a core group of concessions to these cardholders. The core concessions cover energy charges, municipal and water rates, public transport and motor vehicle registration.

Findings

Recommendations

Recommendation 4.29: Roles and responsibilities

The Commonwealth should negotiate with the States to clarify roles and responsibilities for providing family services on the presumption that most services should be transferred to the States through untied general purpose grants.

Recommendation 4.30: Purchaser/provider arrangements

Where the Commonwealth identifies a continuing role for itself, services should be delivered by clear purchaser/provider arrangements. An example of these arrangements is where the Commonwealth may consider it has a continuing role, due to its interest in the composition of the labour market, for the provision of work related childcare.

Recommendation 4.31: Competitive neutrality

The Commonwealth should withdraw operational subsidies from publicly funded childcare centres to ensure competitive neutrality and improved equity in payments amongst parents using public and private sector providers.

Recommendation 4.32: Pensioner concessions

The Commonwealth and the States should examine ways to better target pensioner concessions and provide more broadly based and equitable application of the available subsidies. Consistent with the principles identified by the Commission, responsibility for the provision of service specific subsidies should lie with the States.

Table 4.4: Adelaide Central Mission family services

Program name Funding body Service type & size Client entry criteria
Relationship Counselling Commonwealth Attorney-General's Dept. Administered by LAFS Relationship Counselling including domestic violence, separation and children's problems.

140 interviews/month.

Couples, individuals or families experiencing problems in these areas.
Family Counselling Dept of Family & Community Services (SA) Counselling, with an emphasis on those who have experienced sexual abuse.

110 interviews/month.

Non-offending parents of children who have been abused. People who have experienced abuse.
Placement Prevention Program Dept of Family & Community Services (SA) Counselling. Where appropriate, prevents placement of children in substitute care. Assists with reunification and access.

55 interviews/month.

All referrals from Dept of Family & Community Services.
Financial Counselling Commonwealth Attorney-General's Dept. administered by FBOCA Assists with financial and money management problems.

60 clients/month.

Any person with personal/domestic financial concerns. Excludes current business debts.
Domestic Violence Helpline SAAP funded. Administered by Dept of Family & Community Services (SA) Telephone information, counselling and referral service, with regard to domestic violence.

90 calls/month.

Any person seeking help related to domestic violence.

Source: Adelaide City Mission, Submission to the National Commission of Audit, 1996.

 

Table 4.5: Commonwealth/State overlap in family support services

Commonwealth Department and Program 1995-96
$m
State Programs
Health and Family Services    
National Prevention Strategy for Child Abuse and Neglect 3.70 Yes
Family Resource Centres 4.70 Yes
Innovative Health Services for Homeless Youth 2.50 Yes
Youth Suicide Prevention 1.60 Yes
Emergency Relief 17.30 Yes
Youth Activities Services 3.60 Yes
Attorney-General's    
Community Development Officers Pilot Project 0.60 No
Facilitated Handover and Visiting Services Pilot Project 1.10 No
Marriage/Relationship Education & Counselling 16.70 No
'Get it Right - Human Rights' Education Project 0.10 No
Family Skills Training 2.0 No
Industry, Science and Technology    
Financial Counselling 2.30 Yes
ATSIC    
Community and Youth Support Program 30.20 Yes
Primary Industries and Energy    
Rural Communities Access Program(a) 12.10 Yes
Farm Household Support Scheme 2.50 No
Immigration    
Community Grants Program(b) 24.80 Yes
Refugee minors without parents in Australia and their care givers(c) 0.40 No
Community Refugee Resettlement Scheme(d) 1.70 No
On arrival accommodation(e) 4.80 No
Social Security    
Compensation to the States for extension of pensioner concessions 131.20 Yes
Community Service Officers 1.30 No
Family Service Centres 0.30 No
Financial Information Service 8.70 Yes
Social Work Service 26.40 Yes
Support Network for Aboriginal and Torres Strait Islander families 0.80 Yes

Source: Department of Finance.

(a) For the counselling and business advice elements of the program.

(b) $14.8m in 1994-95 was for grants in aid to community organisations to initiate and manage services which help with settlement; about $6m was for migrant resource centres which operate within defined catchment areas, providing direct services to and advocacy on behalf of migrants and refugees whose needs are not being met by other community programs; $1.2m for migrant access projects: that is, access to other government services.

(c) Assists refugee children without parents through cost sharing arrangements with State welfare authorities to provide targeted casework and support services.

(d) Provides assistance to community groups who have taken responsibility for many of the resettlement needs of humanitarian entrants assigned to them by Department of Immigration and Multicultural Affairs.

(e) Provides initial accommodation and information mainly, if not exclusively, for refugees for up to 13 weeks to help them settle in Australia.

4.10 HOUSING

Summary of arrangements

Housing assistance is currently provided by the Commonwealth in the form of rent assistance payments for around 985,000 beneficiaries and pensioners in private rental at an estimated cost of $1.6b in 1995-96. It is also provided through matched capital grants to the States totalling $1.1b in 1995-96. The States' matching contribution is $427m. These grants provide public rental housing under the Commonwealth/State Housing Agreement.

The States are responsible for housing stock currently valued at over $34b.

There are about 387,000 houses rented from governments around Australia. DSS clients represent around 87 per cent of the tenants. They pay on average about 20 per cent of their income on rent and receive an average subsidy on market rent of about $4,000 a year. The States contribute about $1b a year in notional subsidy to these tenants by taking less than market returns on their housing assets.

DSS clients renting private housing pay higher percentages of their income in rent. It is estimated that some 40 per cent of DSS clients pay 30 per cent or more of their income in rent. The average rental assistance payment is around $1,600 a year.

Specific housing assistance schemes are operated by different levels of government, each with its own objectives. They range from general public housing, through numerous forms of community housing, special needs housing, rent assistance and bond assistance to home ownership assistance.

Total government expenditure on private rental assistance has grown over the past decade from less than $100m to around $2b in real terms. This has been the result of the Commonwealth increasing both the amount and the coverage of rent assistance to most pensioners and beneficiaries.

COAG agreed in April 1995 that a new funding model for public housing be developed. This model would more clearly define roles and responsibilities of the Commonwealth and the States.

In November 1995, the Commonwealth announced its intention to adopt (subject to the agreement of the States) a funding model under which it would accept responsibility for housing rental subsidies. The States would be responsible for the supply and delivery of public housing, including the provision of capital funding for the upgrading and expansion of public housing stock.

The Government's election commitment is to proceed with the reforms, with the added principle that existing tenants in public housing not be disadvantaged.

The proposed division of roles matches the comparative advantages of the Commonwealth in providing benefits to individuals to purchase services, and of the States in the management and delivery of the services.

Findings

Recommendations

Recommendation 4.33: Further alternatives for COAG

The COAG negotiations should be expanded to consider alternative options that involve either all responsibility for housing assistance being passed to the States, or the Commonwealth responsibility being confined to housing assistance for those eligible for income support.

Recommendation 4.34: Incentives for contestability

The new housing agreements with the States should incorporate incentives for contestability in the management of public housing stock.

4.11 ENVIRONMENT

Summary of arrangements

The Commonwealth has made significant expenditure commitments on the environment (currently $396m a year, plus election commitments of $1.1b over the next five years). Increasing pressure is arising out of international treaties, public concern and sectoral interests for far greater expenditure. The most recent available estimate of Australian expenditure on environment protection is $5.1b. This is a partial estimate from the Australian Bureau of Statistics (1991-92).

The Commonwealth's role in the environment stems from various key international agreements, such as the 1992 Rio Declaration on Global Sustainable Development, the World Heritage Convention and the Basel Convention on Hazardous Wastes.

States and local governments have significant responsibility for the practical implementation of environment matters.

The Intergovernmental Agreement on the Environment (IGAE) of May 1992 sets out the responsibilities of Commonwealth, State and local governments in relation to environmental issues.

Findings

Environmental protection

The Commonwealth Environmental Protection Agency (EPA) was established on 26 August 1991 as an agency within the Department of the Environment, Sport and Territories. Its purpose is to facilitate a nationally coordinated approach to environmental protection, to administer environmental protection matters within Commonwealth jurisdictions and to meet international obligations.

The Commonwealth's coordination role is already met by intergovernmental agreements and ministerial councils and committees such as the IGAE, the National Environment Protection Council, the Intergovernmental Committee on Ecologically Sustainable Development, and the Australia and New Zealand Environment and Conservation Council.

Environmental protection is primarily a State responsibility for the following reasons. State EPAs have comprehensive and adequate charters, with extensive regulation and enforcement powers and resources to administer environment protection. State EPAs have greater roles and responsibilities than the Commonwealth within their jurisdictions. The Commonwealth's role in administering environmental protection matters is limited.

Some of the Commonwealth's environment protection monitoring and advisory role is already undertaken by Commonwealth agencies other than the EPA; for example, the Department of the Environment, Sport and Territories, the Department of Primary Industries and Energy and the Department of Foreign Affairs and Trade.

Other

Recommendations

Recommendation 4.35: Roles and responsibilities

The implementation of the principles underpinning the Intergovernmental Agreement on the Environment and the practical operations of the associated bodies should be clarified by governments to identify:

Recommendation 4.36: Economic instruments

Commonwealth and State agencies should pursue greater use of economic instruments, such as appropriate valuation and pricing of resources and increased cost recovery, through purchaser/provider agreements.

4.12 REGIONAL DEVELOPMENT, URBAN MANAGEMENT AND LOCAL GOVERNMENT

Summary of arrangements

The Commonwealth funds local government through specific purpose payments through the States. These grants are in two categories: general assistance and identified road funding of approximately $807m and $358m respectively in 1995-96.

The States have their own programs of urban infrastructure provision and local government reform. Local governments operate under State laws and are a State responsibility. However, in 1995 the Commonwealth signed an accord with the Australian Local Government Association, on behalf of local government, to further Commonwealth objectives for local governments.

In recent years the Commonwealth's involvement in regional development, urban management and local government has increased significantly. The following programs illustrate this greater involvement.

Findings

Recommendations

Recommendation 4.37: Abolish programs

The Regional Development Program, Urban Flood Mitigation Program and the residual Local Government Development Program elements should be abolished.

Recommendation 4.38: Integration of grants

Local government financial assistance grants should be integrated into revised State payments.

Recommendation 4.39: Commonwealth objectives

Commonwealth objectives should be pursued within the framework of intergovernmental relations in COAG.

4.13 WORKERS COMPENSATION

Summary of arrangements

The total cost of work related injury and disease to workers, their employers and the rest of the community is at least $10b a year - a cost significantly higher than the amounts covered by workers compensation premiums.

There are currently 10 separate jurisdictions for workers compensation across Australia, including two Commonwealth schemes - Comcare and Seacare. There are wide disparities between the schemes; for example, in definitions of compensable injury and illness, in benefit structures, premium structures and private sector insurance industry involvement.

Findings

Recommendations

Recommendation 4.40: National standards

The Commonwealth should undertake negotiations with the States to develop national standards and arrangements that would:

Recommendation 4.41: Ministerial council

A Ministerial council on workers compensation should be established to encourage standardisation and competition and the development of uniform legislation.

Recommendation 4.42: Timing

The Commonwealth should seek COAG agreement to appropriate goals and a realistic timetable for standardisation.

Recommendation 4.43: Align Comcare with new national standards

The Commonwealth should align workers compensation provisions for its employees with the new national standards, in particular to reduce the scope for unwarranted stress related compensation claims.

4.14 INDUSTRIAL RELATIONS

Summary of arrangements

Australia has a dual system of Commonwealth and State industrial legislation and tribunals.

The current Commonwealth industrial relations system is underpinned primarily by section 51 (xxxv) of the Constitution which allows the Commonwealth to make laws with respect to:

...conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State.

Minimum entitlement provisions under the Industrial Relations Act 1993, however, are linked to the Commonwealth's ratification of International Labour Organisation conventions and depend on the external power under section 51 (xxix) of the Constitution.

Industrial relations at the Federal level is regulated by the Australian Industrial Relations Commission (AIRC). Administrative support to the AIRC is provided by the Australian Industrial Registry.

Although constitutionally the powers of the States to regulate industrial relations are less constrained, until recent years the States generally followed the Commonwealth model in relation to tribunal structures and processes. Changes have occurred at the State level to facilitate enterprise bargaining, although in some States significantly less regulation of the industrial parties has been introduced.

As at May 1990, around 38 per cent of employees were covered by Federal awards with State awards covering 42 per cent. The remainder were not covered by awards. Commonwealth and State awards commonly operate at the same workplace.

A gradual migration of employees from State to Federal award coverage has occurred over recent years following minimum entitlement safeguards provided in the Commonwealth Industrial Relations Act 1993.

Findings

Recommendations

Recommendation 4.44: Uniformity and simplification

The Commonwealth should undertake negotiations with the States to develop greater uniformity and simplification in industrial relations regulatory arrangements preferably through complementary, template legislation.

Recommendation 4.45: Integration

Cooperative, integrated processes and administration between the Commonwealth and State industrial relations tribunals and awards inspectorates, and similar bodies at the State level, should be facilitated and encouraged. The capacity of the AIRC to work more closely with State industrial tribunals should be strengthened. One set of courts should be created to handle disputes, whether arising from Commonwealth or State jurisdiction.


Commonwealth of Australia