Fiscal Relations Across Levels of Government in Australia

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Fiscal Relations Across Levels of Government in Australia

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Vassiliki Koutsogeorgopoulou ()

Abstract

Key areas of public service provision in Australia are subject to complex patterns of joint government involvement that can lead to inefficiencies. Clarifying government roles and responsibilities is likely to have a significant potential for improving public sector efficiency. Fragmentation of decision making and funding arrangements, particularly in the areas of hospital services and old-age care, creates incentives for cost and blame-shifting between government levels. A collaborative approach between government levels to overcome some of these problems, as recently initiated by the Council of Australian Governments, would help to develop better governance arrangements and improve spending assignments. A less complex system of inter-governmental transfers would also contribute to a more effective specification of spending responsibilities. Stronger revenue-raising capacity of the states, through a further improvement in the efficiency of the state tax system, would raise the ability of sub-national governments to meet expenditure responsibilities and be better prepared for coping with demographic change.

Les relations budgétaires entre niveaux d'administration en Australie
La fourniture des principaux services publics en Australie fait intervenir des formules complexes de compétence partagée qui peuvent être source d'inefficience. Le secteur public pourrait sensiblement gagner en efficience si l'on clarifiait les missions et les compétences des différents niveaux d'administration. Le morcellement de la prise de décision et des dispositifs de financement, surtout pour les services hospitaliers et les soins aux personnes âgées, favorise les transferts de coûts et la déresponsabilisation dans les rapports entre niveaux d'administration. Une démarche fondée sur la coopération pour régler certains de ces problèmes, comme celle récemment engagée par le Conseil des gouvernements australiens, contribuerait à la mise en place de structures de gouvernance plus efficaces et à une meilleure affectation des dépenses. Un système moins complexe de transferts entre niveaux d'administration permettrait également de mieux préciser les responsabilités en matière de dépenses. Si les États avaient davantage de capacités de recettes, en améliorant encore l'efficience de leurs systèmes fiscaux, les autorités infranationales pourraient mieux faire face à leurs obligations de dépenses et seraient mieux préparées au changement démographique.

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Paper provided by OECD Economics Department in its series OECD Economics Department Working Papers with number 541.

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Date of creation: 23 Jan 2007
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Handle: RePEc:oec:ecoaaa:541-en

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Find related papers by JEL classification:
H1 - Public Economics - - Structure and Scope of Government
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

This paper has been announced in the following NEP Reports:

NEP-ALL-2007-02-10 (All new papers)
NEP-PBE-2007-02-10 (Public Economics)

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