COAG: States, territories to discuss income tax, health, education, domestic violence

State and territory leaders are on their way to Canberra today for a dinner with the Prime Minister ahead of their Council of Australian Governments (COAG) meeting tomorrow.

Malcolm Turnbull has already outlined proposed changes to income tax, but what else can we expect from tomorrow's meeting?

Income tax changes

Mr Turnbull yesterday unveiled a proposal for a significant shake-up of the tax system, advocating for states and territories to levy their own income tax.

He wants to reach agreement with the states to lower the percentage of tax collected federally, allowing the states to collect a portion of income tax funds directly and allow them to move away from their reliance on commonwealth grants.

How will income tax change?


  • The Commonwealth collects all income tax and distributes it to the states and territories as grants for health and education


  • The Commonwealth would drop its income tax rate by an "agreed percentage", allowing for states and territories to levy their own income tax to meet that gap
  • That state income tax revenue would be used to pay for services such as health and education, rather than relying on Commonwealth grants
  • Malcolm Turnbull said that for now it would mean the overall tax burden would not increase
  • But he said in the future the states and territories could raise or lower their own rate

But the changes need state approval and a number have already rejected the idea:

  • Victorian Labor Premier Daniel Andrews: "Calling this a thought bubble would be kind. I don't think this has been thought through, I don't think this has been examined properly."
  • South Australian Labor Premier Jay Weatherill: "That's something that wouldn't be practical. I couldn't imagine a state would be interested in doing that. It'd create a lot of confusion across the federation, it'd be very impractical to administer."
  • Tasmanian Liberal Premier Will Hodgman: "We are a state that is small and with a demographic profile that would disadvantage us against other states."

Others remain open to the option:

  • West Australian Liberal Premier Colin Barnett: "I think what he's proposing is quite a simple reform."
  • NSW Liberal Premier Mike Baird: "While I have historically argued for a share of income tax for the states, this has not involved increasing the income tax burden on Australian households."

Health and hospital funding

State and territory governments have had early discussions with the Commonwealth on a funding olive branch for the nation's hospitals.

Mr Weatherill said earlier this week that a $5 billion deal looked likely to be on the table, but there are concerns the funding will not go far enough.

  • ACT Labor Chief Minister Andrew Barr: "It's not going to be all of the money restored that was cut in the 2014 budget, so it's still going to leave the states and territories with a problem in health."
  • NSW Liberal Premier Mike Baird: "What is required right now is a partnership between the Commonwealth and the states for the health and education services we need."

The Turnbull Government has also unveiled proposed changes to the health system in an attempt to curb the rate of unnecessary hospitalisations by providing patients suffering from chronic medical conditions with a tailored healthcare package.

Education reform options

When COAG last met in December, access to preschool and reform of vocational education was put on the agenda for the 2016 meeting.

ACT Chief Minister Andrew Barr voiced concerns earlier this week over the lack of education funding from the Commonwealth, telling the ABC "there appears to be nothing".

  • ACT Labor Chief Minister Andrew Barr: "Education funding is also very, very important for Australia's future, the future productivity ... I would hope that COAG can reach an agreement."

Domestic violence and child abuse

Domestic violence is also expected to be on the agenda, after work towards a national summit on preventing violence against women and their children was highlighted in the December meeting of COAG.

Any discussion will follow a Royal Commission by Victoria, whose Premier hopes change can be made a national level.

  • Victorian Labor Premier Daniel Andrews: "Hopefully there will be some steps forward we can take as a nation. There's a cost involved, but they're not costs really. They're investments in a more decent Australia."


Source: ABC News

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