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Federal-State Relations in Australia

Author

Listed:
  • Vassiliki Koutsogeorgopoulou

    (OECD)

  • Annamaria Tuske

    (OECD)

Abstract

Australia’s inter-governmental fiscal relations have gradually moved towards greater centralisation. State governments receive sizeable transfers from the federal government and own revenues only partially cover their expenses. Finding the right balance between federal control and state autonomy in public service provision and its financing has not been easy. Over time various compromises have somewhat blurred responsibilities in various functional areas or reduced incentives to raise sub-national revenues potentially affecting public sector efficiency and service quality. A better balance, one in which central government has less steerage over state activities and states have more financing autonomy but also bear increased responsibility is likely to improve outcomes. Federal-state shared responsibilities continue to affect the efficiency of healthcare service delivery in particular. A clearer delineation of roles in shared functions and possibly a reallocation of responsibilities in some cases, are important. There is also scope to reduce federal grant conditionality further to contain red tape and enhance transparency and give the states a more flexible allocation of funds. Strengthening states’ revenueraising by broadening existing tax bases would promote efficiency. Consideration could be given to the introduction of a state-level income tax. The government’s current review of the federal system, focusing on both spending and tax responsibilities, is welcome, as is the “whole of government” approach to the process. This Working Paper relates to the 2014 OECD Economic Survey of Australia (www.oecd.org/eco/surveys/economic-survey-australia.htm). Les relations entre la Fédération et les États en Australie En Australie, les relations budgétaires entre différents niveaux d’administration ont progressivement évolué vers une plus grande centralisation. Les administrations des États perçoivent des dotations considérables du gouvernement fédéral et leurs propres recettes ne couvrent qu’une partie de leurs dépenses. Trouver le juste équilibre entre contrôle fédéral et autonomie des États pour la fourniture de services publics et leur financement n’est pas chose aisée. Divers compromis opérés au fil du temps ont quelque peu brouillé les responsabilités dans différents domaines d’intervention ou réduit les incitations des administrations infranationales à générer des recettes, ce qui peut se répercuter sur l’efficacité du secteur public et la qualité des services. Pour améliorer les résultats d’ensemble, il faudrait opérer un rééquilibrage, par lequel l’administration centrale exercerait moins de contrôle sur les activités des États et les États disposeraient d’une plus grande autonomie financière mais assumeraient davantage de responsabilités. Le partage des responsabilités entre la Fédération et les États continue de peser sur l’efficience de la prestation des services de santé, notamment. Il convient de mieux définir les rôles de chacun dans les fonctions exercées en commun et éventuellement de réattribuer les responsabilités dans certains cas. Il y a également lieu de continuer de réduire la conditionnalité des dotations fédérales afin de limiter la bureaucratie et d’améliorer la transparence, et de permettre aux États de faire un usage plus souple des fonds. Augmenter la capacité de prélèvement fiscal des États en élargissant les bases d’imposition existantes irait également dans le sens d’une plus grande efficience. Il conviendrait d’envisager d’introduire un impôt sur le revenu au niveau des États. Le réexamen actuel par le gouvernement du système fédéral, qui porte à la fois sur les responsabilités en matière de dépenses et de prélèvements, est une initiative bienvenue, tout comme l’approche à l'échelle de l'ensemble de l'administration suivie pour ce processus. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de l'Australie, 2014 (www.oecd.org/fr/eco/etudes/etude-economique-australie.htm).

Suggested Citation

  • Vassiliki Koutsogeorgopoulou & Annamaria Tuske, 2015. "Federal-State Relations in Australia," OECD Economics Department Working Papers 1198, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1198-en
    DOI: 10.1787/5js4h5mx7bg0-en
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    Cited by:

    1. Michael Klien & Hans Pitlik & Matthias Firgo & Ulrike Famira-Mühlberger, 2020. "Ein Modell für einen strukturierten vertikalen Finanzausgleich in Österreich," WIFO Studies, WIFO, number 65854, April.

    More about this item

    Keywords

    Australia; Australie; division; division; déséquilibres; education; equalisation; health care; horizontal; horizontal; imbalances; impôt; partagé; prestations; provision; péréquation; responsabilité; responsibilities; services; services; shared; soins de santé; tax; vertical; vertical; éducation;
    All these keywords.

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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