COAG, health reform and intergovernmental relations
Surprise, surprise, Prime Minister Kevin Rudd is having difficulty selling his health reform package to the states.
The Australian Constitution divides power between the federal government and the state governments, with Section 51 detailing the powers of the federal government.
Since the federal government took control of income tax in the 1940s, a vertical fiscal imbalance has ensued between the federal and state governments. Here the federal government collects the bulk of the revenue while the states deliver the bulk of the services.
Any reconfiguration of the powers of both levels of government needs to take into account the principle of subsidiarity — ‘the concept that decisions should be taken as close as possible to the citizens by the lowest-level competent authority. … In principle, subsidiarity would entail that a central (or higher) level of government would perform only those essential tasks that (for reasons of scale, capacity or need for exclusive power) cannot be effectively undertaken at lower levels of administrative decision-making’ (http://epress.anu.edu.au/anzsog/fra/mobile_devices/ch10s04.html).
