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Fiscal Relations Across Levels of Government in Australia


  • Vassiliki Koutsogeorgopoulou


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.

Suggested Citation

  • Vassiliki Koutsogeorgopoulou, 2007. "Fiscal Relations Across Levels of Government in Australia," OECD Economics Department Working Papers 541, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:541-en

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    References listed on IDEAS

    1. Brunetti, Aymo & Weder, Beatrice, 2003. "A free press is bad news for corruption," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1801-1824, August.
    2. S. Guriev & G. Egorov & K. Sonin., 2007. "Media Freedom, Bureaucratic Incentives, and the Resource Curse," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 4.
    3. Isabelle Joumard & Per Mathis Kongsrud & Young-Sook Nam & Robert Price, 2004. "Enhancing the Cost Effectiveness of Public Spending: Experience in OECD Countries," OECD Economic Studies, OECD Publishing, vol. 2003(2), pages 109-161.
    4. Phyllis Dininio & Robert W. Orttung, 2004. "Explaining Patterns of Corruption in the Russian Regions," William Davidson Institute Working Papers Series 727, William Davidson Institute at the University of Michigan.
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    More about this item


    Australia; Australie; déséquilibre budgétaire vertical; fiscal federalism; fédéralisme budgétaire; horizontal equalization; peréquation budgétaire horizontale; vertical imbalance;

    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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