Australia: The Intergovernmental Agreement on Federal Financial Relations

On 29 November 2008, the Australian government (hereafter Commonwealth government) and the states and territories (the states) agreed on an Intergovernmental Agreement on Federal Financial Relations that came into effect on 1 January 2009 and profoundly changed Australian fiscal federalism. The agreement provided an overarching framework that aims at improving the quality and effectiveness of public service delivery in Australia. The Intergovernmental Agreement consisted of three pillars: i) an increase in the states’ flexibility in service delivery ii) more state accountability to the public for the quality and effectiveness of services and iii) a considerable increase in the amount of federal funding for some key services. The Intergovernmental Agreement built on previous reforms such as the introduction of the Goods and Services Tax in 2000 and is generally considered to be one of the widest-reaching reforms in the history of Australian intergovernmental fiscal relations (see ).