Role states in service funding

I found this debate about abolishing the states: www.abc.net.au/tv/bigideas/browse/video_popup.htm?vidURL=/tv/bigideas/stories/2009/05/27/2582441-mediarss-full.xml&vidTitle=Should%20State%20Governments%20Be%20Abolished?&vidLength=Full it goes for 1 hour and 42 minutes.

Hey Edwin I listened to that debate last night. A very interesting discourse.

I'm particularly interested in the fact that the affirmative side essentially saw that the states needed to be abolished because of the backwards way they are funded.

The panel was mostly academics so I'm keen to find work they've published and use it as the basis for a new state funding model.

I wonder if Bill (or others) have written any alternative proposals that could be used as the basis for an MMT based state funding model.

Right so in the debate they basically conclude that it's a problem of funding structures.

Bill wrote this:

"The large areas of government spending such as education, public transport, roads and the like are primarily the responsibility of the Australian states rather than the federal government.

But Section 96 of the Australian Constitution empowers the federal government to make so-called conditional grants to the States for any purpose, which means the federal level has the capacity to influence state-level decisions in all areas even if the Constitution does not allow any explicit federal responsibility or power.

So in many areas such as roads, the two levels of government share responsibilities and roles which leads to problems of administrative duplication and cost shifting from one level to the other in either direction. Public health is a classic case."

bilbo.economicoutlook.net/blog/?p=32302

My concern as a per capita expense would be the location and distribution of the people.  Clearly on the east coast, people are tightly clustered around the seaboard so expenditure is easily efficient for those located on the eastern seaboard, those inland with more land area to cover and less infrastructure will be inefficient.  Need to find a model that has outcomes that turns that inefficiency on its head.

Flick all the way to the West Coast, sparsely populated in comparison to the East Coast - major centres considerable distance apart.  Is it a singular model idea or a multi-model idea of funding that needs to be looked at.

Yes...Mosler is typically good at designing those types of incentives.  Even his healthcare grant idea sounds quite similar (but still different) to what I recall about the NDIS.

That's essentially how the GST works - it is a State based Tax but in short the Constitution prevents the States from collecting their own so the federal government does it.

I'm still not convinced the GST is Constitutional on the face of it but I believe it has been tested in the high court (that or there was legal advice to say it was fine)