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									Speech
The COAG reform agenda: How are governments performing so far?
CEDA Melbourne

Paul McClintock AO, Chairman, COAG Reform Council
21 September 2010
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First, my thanks to CEDA for their continuing interest in the COAG agenda, and in
particular in the ongoing role of the COAG Reform Council (the council). Given
CEDA’s role and history it is not surprising it is one of the few organisations that
understands the significance of what is happening in the area of federal financial
relations.

My prepared speech spends time on explaining the framework for the council’s
activities, and the structure of the current federal financial arrangements. When I
looked at who was coming today I decided to deal with that introduction briefly, as
many of you have been involved in this exercise even longer than I. That time can
be better used going back to some of the remarks I made last week to the NatStats
Conference 2010, and in looking at the council’s conclusions in the report released
today—the COAG reform agenda: Report on progress 2010.

In November 2008, an overarching Intergovernmental Agreement on Federal
Financial Relations was signed by the Commonwealth, States and Territories. In an
era of unsupported hyperbole about reform, this Agreement was rightly described
as ‘the most significant reform of Australia’s federal financial relations in decades’.
My argument to the statistics community was that this change put huge importance
on the collection and analysis of performance data, and that they—and we—had a
short time to make this system work.

I will come back to this theme at the end of my remarks, and I think it is as relevant
to many people in this room—particularly those from the state government—as it is
for our nation’s statisticians.

First let me turn to a quick overview of the role and context of the council.

The COAG Reform Council

As many of you would know, the COAG Reform Council reports to COAG on how
our governments are performing across a range of areas, including education, skills,
healthcare, disability services, housing affordability, Indigenous reform, regulatory
and competition reform, water reform and cities planning.

The COAG Reform Council is funded by all nine governments and reports directly
to COAG. It comprises six non-executive members, and Mary Ann O’Loughlin,
who is the head of the Sydney based secretariat and Executive Councillor.

What’s important about this model is that it is independent of individual
governments and balances Commonwealth and State and Territory interests. It is
also the first time that there has been an independent body reporting back to COAG
on the reform commitments that it has made.

If you’re not very familiar with our role and would like further information, I
encourage you to have a look at our website.

The COAG reform agenda

COAG focuses on reforms of national significance which require cooperative
action by the nine Australian governments. COAG’s objective in advancing these
reforms is to improve the wellbeing of all Australians, now and in the future.

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The current COAG reform agenda was articulated by COAG throughout 2008.
COAG committed to an agenda that would address the challenges of boosting
productivity, increasing workforce participation and mobility, and delivering better
services to the community. COAG also agreed that its agenda would contribute to
the broader goals of social inclusion, closing the gap on Indigenous disadvantage,
and environmental sustainability. This key framework is the template against
which we have reviewed progress in our COAG reform agenda: Report on
progress 2010, so it is worth remembering.

Intergovernmental Agreement on Federal Financial Relations

The institutional framework of the COAG reform agenda and ongoing
intergovernmental cooperation is underpinned by the 2008 Intergovernmental
Agreement.

The key features of these arrangements are:

    cooperative federalism, to which I will return

    outcomes focus

    simplified financial arrangements

    clearer roles and responsibilities, and

    performance reporting and accountability.

The new arrangements take advantage of Australia’s federal system with its built-in
basis for benchmarking and comparing across Commonwealth, State and Territory
governments. They are aimed squarely at improving performance through fostering
and strengthening learning.

Many of the key features of the new framework will require cultural change in the
way all governments approach intergovernmental relations, policy development
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and service delivery—both across and within governments. There are some
important areas of focus for COAG, and the institutions that support it, in bringing
about this cultural change and realising the promise of institutional reform.

I’ll come back to this point later.

Our council believes that the objective and reform activities of the COAG reform
agenda represent the most comprehensive economic, social and environmental
reform agenda ever contemplated in the context of intergovernmental relations in
Australia.

The role of the COAG Reform Council

This brings me to the council’s role.

The COAG Reform Council has been established to assist COAG to drive its
reform agenda. Independent of individual governments, we report directly to
COAG on reforms of national significant that require cooperative action by the
nine Australian governments. So the crux of our role is public accountability—
making governments publicly accountable for their performance against targets
they have set for themselves.

Progress so far and challenges

We have published nine reports to date, and in doing so we have made a number of
recommendations to COAG, and have come across many challenges.

It is timely that we released today our report on the progress against COAG’s entire
reform agenda, judged against the challenges and broader goals of the COAG
reform agenda I outlined earlier.

The report looks at the whole reform agenda and found that governments are
generally doing what they committed to do. The council also believes that the

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breadth and ambition of the reform agenda remain worthy, and it urged COAG,
governments and stakeholders to stay the course of reform.

The report then makes three important recommendations for improvement—one
dealing with clarity of goals, a second relating to data assessment, and the third
dealing with the need for cultural change.

Clarity of goals is all about asking COAG to define how they expect individual
programs to impact on the reform agenda’s objectives. For example, COAG has
said that ‘delivering better services to the community’ is a challenge. But this is a
very broad concept. So we need to break this down into more specific goals to
which we can link to reform activities, and measure progress.

Essentially, it’s unclear if the specific goals are to improve hospitals or schools, or
other public services and it is not clear what kind of improvements are to be
achieved; is it about efficiency, effectiveness, or access?

Another example of the need for improved clarity is seen with COAG’s goal of
environmental sustainability, where the contribution of reform activities to address
this challenge is not clear. Related COAG activity identified by the council tends to
address specific sectoral reform needs rather than being aimed at the goal of
environmental sustainability.

So, the council has recommended that COAG consider whether the current
challenges and broader goals provide clear, observable and measurable outcomes
for the purposes of public performance reporting on the entire COAG reform
agenda.

This clarity is needed so both the council, and the Australian public, can see if we
are getting closer to achieving the objectives of the agenda.



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This speech does not have the scope to do justice to second recommendation area
dealing with data improvement, but I will give you the headings of the analysis I
gave in my Natstats speech, and urge those of you who are interested to visit our
website and read the details. In that speech, I detailed council’s recommendations
on five issues:

1) Strong conceptual framework

First, each National Agreement needs a strong conceptual framework underpinning
it, providing a clear basis for linking the performance indicators with the desired
objectives and outcomes.

Take the example of the National Healthcare Agreement. This Agreement is the
largest and most complex of all the National Agreements. It consists of seven long-
term objectives, 11 outcomes, 26 progress measures, 15 outputs and nine
performance benchmarks. The progress measures and outputs are reported through
70 performance indicators. Such complexity makes effective public accountability
impossible.

Furthermore, the need for a strong conceptual framework holds true for all the
National Agreements. I am pleased that COAG, at its December 2009 meeting,
requested the Heads of Treasuries to undertake a review of National Agreements,
covering the clarity of objectives and outcomes, and the quantity and quality of
performance indicators and benchmarks. This is crucial work, and we should all
wait for its results with great interest.

2) Availability of adequate data

The second issue is the availability of adequate data for reporting progress against
performance indicators and benchmarks. All National Agreements have examples



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of performance indicators which have no data or have inadequate data to report
progress.

For example, for the baseline National Healthcare Agreement there were no data to
measure 13 of the 70 performance indicators.

For all National Agreements there are also significant problems with inadequate
data to report progress over time. This is often due to differences in collections and
comparability across States and Territories and when data are disaggregated for the
target social inclusion groups of Indigenous people and people from low socio-
economic backgrounds.

3) Timeliness of data

The third area where the council is urging significant improvements is the
timeliness of data.

The stand-out problem in this case is the ABS Survey of Disability, Ageing and
Carers, which is a significant source of data for the National Disability Agreement.
This survey is conducted every six years. The council’s baseline report for the
National Disability Agreement had to rely on data from 2003.

4) Council’s ability to monitor and report change over time

The fourth area of concern is the ability of the council to monitor and report on
change over time.

With our second and subsequent year reports, the council’s role in performance
monitoring and reporting clearly shifts towards measuring change over time. This
can be very difficult—even impossible—when the data are not adequate.




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5) Use of administrative data

This brings me to the final area where the council is urging significant
improvements so that we can more effectively undertake our task of performance
reporting under the National Agreements: the use of administrative data.

For example the council is forced to use out of date data in relation to Year 12
attainment when there is administrative data available that is actually well-suited to
the task of monitoring change over time. The measure of Year 12 attainment could
be based on the actual number of Year 12 completions identified through certificate
information, but this information is collected by each jurisdiction, it is based on
different definitions and is not comparable across jurisdictions.

Long-term targets

Apart from the data challenges, another political task will be sticking to the game
plan. Let me give you an example.

Some of the targets set by governments are quite reasonably and sensibly long
term. For example, under the National Partnership Agreement on Closing the Gap
in Indigenous Health Outcomes, governments have committed to:

    closing the gap in life expectancy within a generation

    halving the gap in mortality rates for Indigenous children under five within a
      decade

    ensuring all Indigenous four year olds in remote communities have access to
      early childhood education within five years, and

    halving the gap in reading, writing and numeracy achievements for
      Indigenous children within a decade


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It is sometimes unfortunate that the 24 hour media cycle and the electoral cycles
tend to drive unrealistic expectations that governments should achieve miracles in
implementation.

So a challenge here is to show progressive, incremental progress. The role of our
annual reports in showing progress towards these long-term goals is an important
part of addressing this challenge.

Before dealing with the final issue of cultural change let me turn to two specific
areas of council work—the Seamless National Economy and capital cities strategic
planning.

Seamless National Economy: clarity of implementation planning

Our first report on the National Partnership Agreement to Deliver a Seamless
National Economy released in February this year.

For those who aren’t familiar with it, this is a National Partnership with reward
payments of $450 million to drive reforms aimed at harmonising significant
regulation across the country, reforms to address poorly designed or unnecessary
regulation, and enhancements to economic regulation of infrastructure.

It covers 36 reforms: 27 deregulation priorities, eight competition priorities and
reform of regulation making and review. In July last year COAG also added three
new regulatory reform streams to the agenda of the Business Regulation and
Competition Working Group—these are outside the scope of the National
Partnership.

Findings

Our first report on this National Partnership, assessing performance for the
2008–09 financial year (when there were just 36 streams of work), was released in
February this year.
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Overall, the council found that governments had generally made good progress
implementing the deregulation priorities—which have reward payments attached.
However, generally poor progress had been made on the competition reforms.

In particular, the council found that four competition reforms required COAG’s
active attention to be brought back on track—with particular concern about
competition reform in the areas of transport, infrastructure, and energy.

On transport and infrastructure reforms, the council found that there had been a loss
of momentum, and recommended that COAG reassess these agendas to
reinvigorate these vital reforms.

On energy reform, the council recommended COAG provide a more coherent set of
outputs and milestones for future reporting.

These findings were also backed by a recommendation about ways in which the
implementation plan for all the seamless national economy reforms could be
improved.

On the day that the report was released, governments issued a COAG response to
the report accepting all four of the council’s recommendations. We understand
significant work has since been done by governments to improve the clarity and
tangible reform focus of its implementation plan for this Agreement, but
unfortunately these new plans are not yet public. We urge all those involved to get
this information out to the community, and we urge stakeholders to review it
thoroughly and ensure their reaction is heard.

Our next report on this National Partnership is due to be released in February next
year.




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Capital city strategic planning systems

Let me now turn to COAG’s request to the council to: review capital city strategic
planning systems against agreed national criteria; support continuous national
improvements in capital city strategic planning; and build and share knowledge of
best practice planning approaches.

Since I last spoke at a CEDA function, an expert advisory panel has been appointed
to support the COAG Reform Council in these roles. I’m pleased to say that, after
its recent appointment, the panel has now met and started its substantive work.

Professor Brian Howe AO has been appointed as Chairman of the panel and will be
supported by Lucy Turnbull as Deputy Chair.

And Professor Geoff Gallop, the Deputy Chairman of our council, will serve as the
link between the council and the panel.

This is exciting and interesting work but it will present many challenges.

COAG has agreed a broad objective for this work:

      ‘To ensure Australian cities are globally competitive, productive,
      sustainable, liveable and socially inclusive and are well placed to meet future
      challenges and growth.’

Cities are where most of us live, work and play. They have an enormous potential
impact on our economy, our wellbeing, and our environment. To deliver on
COAG’s objective for capital cities, governments will need to address issues
ranging from population growth and demographic change, to climate change
mitigation and adaptation, to housing affordability and social inclusion, to the
productivity and global competitiveness of our capital cities. And they will need to



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focus their infrastructure provision, transport and land use planning on the long-
term challenges emerging in these areas.

In the future, Commonwealth infrastructure funding to governments will be linked
to consistency with the agreed criteria for capital city strategic planning systems.

The challenge here will be in coordinating so many levels of government, on a
stream of work that covers so many different policy areas.

Our report to COAG on this stream of work is due in December 2011, so I’ll have
more to say about our progress on this in the coming year.

Reporting Timeframes

Before I finish I’d like to give you a quick outline of our upcoming reporting
timeframes.

Our first report on the water management partnerships are due to COAG at the end
of September.

This year we will also report to COAG on the National Partnership Agreement on
Essential Vaccines, and we will submit our second report on the National
Partnership Agreement on the Elective Surgery Waiting List Reduction Plan.

You can see a full list of upcoming timeframes on our website.

Conclusion

Let me end my speech by going back to the issue of cultural change.

Public accountability for the performance of governments is a hallmark of a robust
federation, and it is the basis upon which the new federal financial arrangements
are built. Access to quality and timely performance data will allow the COAG
Reform Council to do what it has been charged by COAG to do: to monitor, assess

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and publicly report on governments’ progress towards the agreed outcomes in the
national reform areas of health, education, skills and workforce development,
disability services, affordable housing and Indigenous reform.

But as I reminded our statisticians last week, there is a sting to this tail, and if they
were now relaxing with the happy glow of heightened relevance, I warned them
that this revolution is poorly understood in the community, and even in
government. The council has real concerns that the political follow up required to
bed down these significant changes has not been consistent, and the necessary
cultural and structural changes in both Commonwealth and State and Territory
bureaucracies have been inadequate.

So this should more be seen as a call to arms, because without public accountability
for results there will be many people keen to return to measuring and managing by
inputs, or at best outputs. There is a real risk that what the Secretary of the
Department of the Prime Minister and Cabinet, Terry Moran, has called ‘the bold
experiment’ will be put aside and the States and Territories will face (again in
Terry’s words) a less amenable Commonwealth and ‘the future of the federation
will change’. And I assure you that politicians will not allow indefinite time for us
to prove this can work.

To bolster the bold experiment, the council strongly believes that the shift to a
focus on outcomes calls for an equally bold reassessment of the priorities for data
development and collection. It also calls for a bold reassessment of how the
Commonwealth and the States and Territories conduct their day to day affairs, and
how they develop complex policy across jurisdictions. Cooperative federalism is
the base of this whole system, and whilst the last 12 months have not killed it, my
view is that it needs real attention.



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The electoral cycle will be propitious early next year for that to be a priority.

Thank you

ENDS




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