State and territory leaders have given in-principle support to consider a proposal to share income tax revenue, but have not reached a consensus on each jurisdiction setting its own rates, following the conclusion of Friday’s council of Australian governments (Coag) meeting.
The prime minister, Malcolm Turnbull, had floated the idea that states could take a share of income tax revenue in exchange for the cancellation of commonwealth grants earlier in the week. He conceded that the jurisdictions could eventually levy their own tax rates.
Premiers and chief ministers were cool on the proposal, saying it would not plug the funding hole created by the 2014 federal budget, and disagreeing on plans to let states take full responsibility for funding public schools.
“We’ve agreed to undertake the examination of what will be historic reforms in the way the federation is administered and governed,” Turnbull said. “We’ll agree to consider income tax sharing within the current envelope and, in return, states will consider state tax reforms which would, in turn, support economic growth.
“There was not a consensus among the states and territories to support further consideration of the proposal that would enable states to levy income tax on their own behalf in circumstances where the federal government withdrew from a portion of its income tax collection.”
The income tax proposal is off the table for good, the prime minister said.
“There is simply not a consensus, not anything like a consensus of interest on the part of Coag,” he said. “That proposal is not there. It is withdrawn. It is not acceptable to Coag. And so, there will be no state or territory involvement in levying income tax.”
There was no proposal for the commonwealth to increase its tax rate either, Turnbull said.
Turnbull also announced that the states and territories would receive an additional $2.9bn in hospital funding over three years.
New South Wales premier Mike Baird said the extra money helped redress the funding hole.
“What happened back in 2014 in relation to health and education ... that wasn’t fair and that wasn’t reasonable. What we have seen today is a restoration of that,” he said.
But Baird’s Victorian counterpart, Daniel Andrews, said there was still some way to go.
“Whilst an agreement today is a positive, there’s no getting away from or getting around or politely explaining away the fact that many billions of dollars will not be flowing to hospitals in my state and hospitals right across the nation as a result of decisions made in the 2014 budget,” he said.
Coag agreed to put off decisions on how to fund education until the start of next year, after the federal election.
Queensland’s premier, Annastacia Palaszczuk, remained resolutely against the commonwealth withdrawing from funding public schools.
“I’m very concerned if there’s any further proposals to look at splitting our public school system from our independent schools and our Catholics. I think that would be detrimental to the nation,” she said.
The states and commonwealth agreed on national standards for reporting child abuse and neglect.
“Our institutions across the jurisdictions need to be able to respond. The inconsistencies that are there and the levels of oversight – it is certainly creating difficulties in identifying risks for children and young people,” the chief minister of the Australian Capital Territory, Andrew Barr, said. “So we need a harmonised reportable conduct scheme.”
