10 December 2015
Media Release - #2015025, 2015

Council on Federal Financial Relations

State & Territory Treasurers communique
Economic & Tax Workshop

The Council on Federal Financial Relations ("CFFR") met today to discuss how Australia's governments can work together to build a strong national platform for economic growth and jobs to incentivise and enable future growth and prosperity.

At the CFFR meeting on 16 October 2015, it was agreed that the Council would continue to explore options for improvements to the tax system and that the Commonwealth Treasury with the state and territory counterparts would review state, territory and Commonwealth taxes as part of the overall review of the national tax system.

The Federal Treasurer provided the Council with an update on the national competition agenda following the release of the Commonwealth Government's response to the Competition Policy Review (Harper Review).

Treasurers agreed that if we are to deliver greater choice and give a boost to our economy - all levels of government must be on board. Many areas involve shared responsibility, such as roads and human services, while other areas that are the sole terrain of the states and territories, including regulation of retail trading hours or taxis and critical areas like planning and zoning, are where reform can deliver real benefits.

The Council was advised that to support the new competition reform agenda the Commonwealth has supported the recommendation to put in place a new institutional structure with the states and territories, including the potential for productivity payments for delivery of reforms. It was noted that this process is linked with the broader discussion currently underway in relation to creating a better tax system.

Today's meeting is a continuation of the ongoing discussions on how Australia's tax system can operate most efficiently at a federal and state level. At the last workshop in October there was a discussion of options and parameters that would deal with changes to federal taxes.

This workshop continued the discovery process of consideration by the Council of all the various options that exist at a state and territory level. The Council was presented with an evaluation of the various state and territory taxes and a series of reform options were put forward for various state and territory taxes.

These are not proposals or a package of reform options but rather the due consideration of possible options, without any decision, and with the prospect of a fairer and more efficient tax system.

Treasurers were also updated by the Commonwealth on the progress of the tax reform options and the development of a better national taxation system. The Treasurers discussed how taxation reform and other reform agendas could boost productivity and further encourage Australians to work, save, invest and employ.

There was agreement from all Treasurers that the taxation reform process presented a rare opportunity to address longstanding challenges to revenue and service delivery. Some states also expressed their concerns in relation to a looming fiscal gap faced by jurisdictions.

The Treasurers agreed to continue discussions around a more sustainable and growth enhancing tax mix and tax base. The Commonwealth will continue to engage on the basis that these reforms do not increase the overall tax burden net of compensation required for tax reform changes.

It had been agreed at the October Council meeting that these consultations would be fed into the COAG process and that the Leaders would be provided with an update on progress in the consideration and evaluation of how a better tax system for Australia could be achieved.

The states, territories and Commonwealth will continue to work towards a comprehensive framework for national reform to support a functional and efficient Federation and promote a stronger Australian economy.

The Commonwealth Treasurer wrote to all state and territories regarding the intent to strengthen foreign investment reviews relating to critical infrastructure.

The Treasurer sought continued cooperation from state and territory governments in the review of sales of critical infrastructure assets to foreign investors to ensure national interest considerations are taken into account.

The Council agreed to cooperate with the Commonwealth on the sales of critical infrastructure assets to foreign investors.