Fed: NSW, Vic, WA call for fairer slice of commonwealth pie

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Fed: NSW, Vic, WA call for fairer slice of commonwealth pie

By Jim Hanna, Economics Correspondent

CANBERRA, Aug 30 AAP - The method of dividing Commonwealth money among the states wasinefficient and unfair, the treasurers of NSW, Victoria and Western Australia said today.

The three states, which claimed they would be shortchanged by $2 billion this financialyear, commissioned a review of Commonwealth/state financial relations by respected economistsRoss Garnaut and Vince FitzGerald (FitzGerald).

"The report confirms our view that Australia's current system does not stack up onthe grounds of efficiency, equity, simplicity and transparency," the treasurers said ina joint statement.

The review concluded that the economic costs of the system were up to $280 milliona year before taking into account hidden costs.

It recommended sweeping changes, including allocating general-purpose grants to coverminimum overhead costs of government and then in proportion to population.

NSW Treasurer Michael Egan called on the Howard government to consider the report andtake up the challenge of reform.

But the call fell on deaf ears.

"I suggest they convene a meeting of the states, leave us out of it and agree amongstthemselves how you carve up the pie," Prime Minister John Howard told reporters in Sydney.

"We deliver a certain amount of money, they decide how it's to be divided and I haveno intention of taking the side of one state against another.

"I'm the Prime Minister of Australia and as far as I'm concerned, when it comes tomatters like this, state boundaries don't exist."

AAP jph/nw/de

KEYWORD: GRANTS