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20 DECEMBER 2007

Subjects: COAG

PM: (inaudible) thank His Excellency, the Governor of Victoria for hosting what has been for us a
very good placed COAG, since the election of our Government in Canberra. We thank the Victorian
Government for making facilities available, and it's been a really good opportunity to have this,
our first meeting, engaged in the process of cooperative federalism outside of the nation's capital
(audio failure)...

... training needs, whether it's also the proper provision of services to Indigenous Australians.
Right across the spectrum, we have a responsibility at all levels of government to (inaudible) get
best yield for the taxpayer's dollar, but to make sure we're providing the best level of services
possible as well. And that's what we've done in the program of work we've agreed today.

We see this as important for the year ahead, 2008, which represents a unique year to (inaudible).

(inaudible) recognises that we, the Commonwealth, have a central role in critical areas affecting
working families across the country, across the spectrum of education and health care,
infrastructure and the rest. I look forward to a period ahead where, together with the Chief
Ministers and Premiers, we'll have our sleeves rolled up and stuck into an ambitious program of

Today, after extensive discussion and debate, we agreed on seven working groups. We will have a
working group on Health and Ageing, which will be chaired by Nicola Roxon, the Federal Minister for
Health. New South Wales will be the co-chair.

On our productivity agenda in Education, Skills, Training, Early Childhood, Julia Gillard, the
Deputy Prime Minister, will chair that working group. Victoria will be the deputy chair.

On Climate Change and Water, the Federal Minister, Penny Wong, will be the chair of that working
group, and South Australia its deputy chair.

On Infrastructure, Anthony Albanese, the Federal Minister, will be the chair, Queensland the deputy

Business, Deregulation and Competition, Lindsay Tanner the chair, WA the Deputy chair.

On Housing, Tanya Plibersek, the Federal Housing Minister, will be the chair and Tasmania the
deputy chair.

On Indigenous Reform Jenny Macklin will be the chair and the Territories combined - the Northern
Territory and the ACT - will combine the deputy chairpersonship.

This is a new model for the way in which we do business. Usually these are devolved entirely to
Commonwealth bureaucrats. At the Commonwealth end, we're actually engaging our Ministers, who have
been recently sworn in and I believe are doing a great job. And they'll have a very important piece
of work to deliver, cooperatively with States and Territories during the course of 2008, and we
look forward to that constructive work together.

What we're releasing today as an attachment to the communiqué are the detailed terms of reference
for each of those working groups, and you'll have those to peruse.

What we've also agreed to today is COAG in calendar year 2008 will meet on a quarterly basis. We
intend to turn COAG into the workhorse of the nation. If you come to future COAG meetings, don't
expect your spectacular, brilliant announcements every time we get together. We see this as part of
the working machinery of the Australian nation. If you're serious about delivering national
outcomes it means making sure that the States and Territories and the Commonwealth are in harness
together, and that's what we propose.

So, we will have those meetings during the course of the year and, of course, and we hope to be
again meeting this time next year as well to bring as much of this work as possible to conclusion.

The core part of the reform program will be the reform of Special Purpose Payments. Now, Special
Purpose Payments are part of the deep structure, folklore and mysticism of Commonwealth-State
relations. If you've worked in these areas before, as I have, they are the source of frustration at
multiple levels, given the multiplicity of them and the way in which they've been designed. Now, we
intend to take a different view. We want to see our SPPs rationalised in the future. We want to see
that SPPs - Special Purpose Payments - increasingly reflect a combination of outcomes and outputs
so that people can measure whether the money which is being invested is actually delivering real
and improved services out for the Australian community.

And secondly, where the Commonwealth's role comes into play in this is that consistent with that
new measurement approach, then we, the Commonwealth, are prepared to embrace incentive payments to
the States. And that is a departure from the past.

You heard me speak in the election campaign about the importance of many areas of cooperation
between Canberra and the States. One of those relates to elective surgery and elective surgery
waiting times. You will be familiar with the commitment that we made during the election period -
during 2008 to bring down elective surgery waiting times by some 25,000 persons.

Today what we've done is to provide a commitment to the States and Territories combined of
additional Commonwealth funding at $150 million for calendar '08, to secure that objective. And the
Treasurers and Health Ministers will be meeting in January to finalise the detailed implementation
arrangements for that to occur - and the distributional arrangements as well.

Another important area requiring work has been in the area of Indigenous affairs. When it comes to
Indigenous affairs, in my recent visit to the Northern Territory and discussion with other Premiers
and Chief Ministers, it's quite clear that in dealing with some of the challenges of alcoholism and
drug dependency, that we need a greater and immediate injection of funds when it comes to alcohol
and drug rehabilitation programs. This was brought home to me by many Indigenous leaders in Darwin
when I visited there only a few days ago.

Therefore, the Commonwealth upfront will be providing the States and Territories with an additional
$50 million commitment as a matter of priority need now to supplement the existing programs in the
delivery of alcohol and drug rehabilitation programs, most acutely in remote areas. This is a
pressing need now, particularly where interventions have occurred in relation to alcohol and the
provision thereof.

In the year ahead, and I conclude on this before turning to Premier Brumby and Premier Iemma to
speak from a State's perspective - Premier Brumby of course is our host today - and before we all
then take questions, I'd just say this: this is going to be a very exciting year, 2008. We've got a
lot of work to. It's going to be difficult, it's going to be hard, it's going to involve compromise
between various levels of government, and we're all going to be squeezed by it. But the great sense
of optimism I have in speaking to my colleagues today is a combined resolve to do something decent
for the nation. The blame game, buck-passing, it might make for interesting retail politics but,
frankly, it's no way to deal with the nation's long- term problems, and we've embarked upon a solid
year of cooperation. The challenge now lies with us to deliver in each of these areas. It'll be a
long process, a hard process, but we're determined to make as much substantial progress as possible
during 2008. Premier Brumby.

BRUMBY: Thank you, Prime Minister. And can I just repeat, I think, some of the comments I have made
already about this meeting and that is just how historic this meeting is, the first ever meeting of
the Council of Australian Governments held outside Canberra. I think that is a very emphatic and
powerful statement by the Prime Minister. It's a statement about the importance of cooperative
federalism, about the importance of a genuine partnership, about the importance of working together
with the States to do what is in the best interests of the people of Australia.

And today I think what we've achieved through this meeting of COAG is really a new start and a new
agenda. We have achieved a genuine partnership. We've had a genuine dialogue, and as the Prime
Minister has said, we've agreed a number of initiatives today which are really about taking the
nation forward, not just in 2008, but in the years ahead.

Today we discussed matters which have never previously ever made it to the agenda of COAG. Morris
Iemma will say a few words about that in a moment, about the difference between today's COAG and
COAGs that have been held in the past.

Today we had an excellent discussion about infrastructure, about nation building, about what we
need to do to tackle some of the supply side constraints. We had an excellent discussion about
climate change. The former Government would never discuss climate change at COAG, or indeed in
other gatherings. And today we talked about what is one of the most pressing issues for our State
and the nation.

We talked, too, today about practical measures which affect the lives of working families. And so
as the Prime Minister has said, additional funding made available today to tackle hospital waiting
lists. We've all got challenges in the health system, right across Australia. This extra $150
million means that we can tackle hospital waiting lists right across Australia. And I must say in
my own State of Victoria, this will mean reducing those longer-term hospital waiting lists by
between five and 10,000 separations.

All of these are things that we never discussed previously at COAG because they would never get
past the Prime Minister and never get on the agenda. But all of them, as the Prime Minister said
today, are absolutely critical to Australia's future.

We certainly welcome, all of the States, welcome the additional funding on hospital waiting lists.
The election commitment, the additional funding that was made available today, this will make a
big, big impression in the delays which people experience in hospital systems around Australia.

Importantly today as well, we committed to some of the longer-term reform issues. Again, as the PM
has said, Australia needs to be more competitive, we need to drive the productivity agenda. And the
national reform agenda, investing in education, investing in skills, investing in early childhood
development, investing in health and preventative health programs, these are all things which will
drive productivity improvements going forward, help us compete as a nation, build a stronger
economy, and take some of the pressure off inflation.

The working groups that have been set up; these are working groups with clear objectives, clear
timeframes and measurable outcomes. Again, as the Prime Minister has said, today was about ending
the blame game, it was about ending the buck-passing, it was about a road map for Australia's

And if you look at the working groups that have been set up, they address each of those seven key
areas, and they will, I believe, produce tangible results for each of the States and for Australia
as a whole.

Finally, can I just say that the issue of incentive payments has always been one that Victoria has
had a strong view about, encouraging the States to do more, encouraging competition and regulation
reforms, and a commitment again at COAG today, and the Prime Minister to an ongoing role for the
reform council and for an acceptance of the importance of incentive payments, I think again, is a
very, very positive step forward in terms of driving productivity growth.

I might just turn to Morris Iemma who has been to previous COAGs, and I think can tell you about
some of the difference in today's to previous events.

IEMMA: Thank you, John. Well, today really is a new era. We adopted an approach of working with
each other to tackle the nation's problems, not tackling each other. That's one of the key
differences from previous gatherings.

Just picking up on some of the things that Premier Brumby said. On the issue of elective surgery
waiting lists; this is the first time that a COAG has made it a national priority, that it's made
it on to the agenda, recognising that we aren't talking about lists and numbers, we're talking
about better health services. Incorporating into the work that we will do, incentive payments for
lifting performance and sustaining performance. Another key difference. It's one thing to reduce
the lists to cut waiting times, it's another to sustain it.

And the working groups that have been established, the health working groups, has as one of its
fundamental roles, to sustain, improved access to health services, and sustain an improvement in
health services, another key difference in some of the debates that have taken place at previous
COAG meetings.

Another key difference: infrastructure. To have the Commonwealth recognise that it has a
fundamental role in infrastructure. A stronger national economy, removing bottlenecks, improving
productivity and efficiency, infrastructure is a key.

And one area we couldn't get progress in the past was to have the Commonwealth recognise that it
has a role. Now, we have a Commonwealth Minister, which was a key point of Mr Rudd's election
campaign and one of the key issues in his victory.

Now, we have a Commonwealth Minister chairing one of the working groups; the establishment of
Infrastructure Australia, a national infrastructure audit, and then determining priorities for the
nation, to expand the nation's economic capacity and to secure our future prosperity, recognising
that infrastructure is a key to doing that. Two fundamental differences to previous COAGs.

The third one I'll mention, climate change. I don't need to go over all the detail on how the
States had to get together and threaten to go it alone on a national emissions trading scheme to
tackle climate change. Here we have a national commitment to tackling climate change through
cooperation and working together.

Three key areas where our commitment is to work together to tackle the nation's problems, not to
attack each other.

PM: Thank you very much. And it's over to you to ask any questions you'd like.

JOURNALIST: (inaudible)

PM: Actually, where I disagree with you, Dennis, is that we've actually set, I think, realistic
goals. Are we going to get there necessarily in all of these? Maybe not. But in the history of the
Federation and in the history of COAG, as some of the Premiers have just said, it's the first time
we've collectively put our shoulder to the wheel to try and make these things happen. What I sense
across my colleagues is a genuine, personal commitment and determination to dedicate every resource
possible to getting a decent outcome for the nation, for the economy and for working families. I'd
much rather try and fall short, than not try at all. And I think that's the resolve of my
colleagues as well

JOURNALIST: (inaudible)

PM: That $150 million represents a $50 million increase on the $100 million which we committed
prior to the election. That follows a meeting with the Commonwealth and State Health Ministers, I
think last Friday, and reports to me via Minister Roxon. But the details of all this will be
finalised when the Health Ministers and the Treasurers, Commonwealth and State, get together in
January. Wayne Swan and Nicola Roxon will be convening that meeting.

JOURNALIST: (inaudible)

PM: Based on the advice from the Health Ministers, we did need to inject some more money. We
believe its' far better to err on the side of caution here rather than not, because, as the
Premiers have just said, these are not numbers, these are people.

We've got to do everything humanly possible. If you're out there waiting for a hip replacement at
the moment, the last thing you'd want is a bit of quibbling between one level of government and the
other in terms of what can be done, in practical terms, to bring that forward.

This does not represent a silver bullet on everything, on every item of elective surgery. But when
it comes to those which have exceeded the clinically acceptable times, I believe governments at
both levels have a responsibility to act. We've done so in the best way we know.

JOURNALIST: (inaudible)

PM: We've had a solid, rounded discussion on the challenges in Indigenous Australia. In particular,
as a consequence of the intervention in the Northern Territory, and based on my discussions with
the Chief Minister of the Northern Territory and meetings with Aboriginal leaders in Darwin the
other day, we've formed a view at the Commonwealth level that we needed a quick injection of
additional resources to deal with this alcohol and drug rehabilitation need, particularly in remote

This is a big problem on the ground. And if you speak to the Aboriginal leaders in the Territory,
they'll give you a lot of detail on this.

More broadly, the reason why we have commissioned a specific working group in this area, to be
chaired by Jenny Macklin, is that we recognise that there are common challenges, shared by the
Commonwealth and the States and Territories, in the area of providing proper services to Indigenous

We've also recognised, I recall in the terms of reference, that we need to look carefully at roles
and responsibilities between the Commonwealth and the States for the future delivery of services to
Aboriginal people. That's reflected in the terms of reference.

I believe we are looking at a productive and cooperative year ahead. This is an area of massive
need. And let's just face facts, a lot of things that have been tried in the past haven't worked
well, and I put the Commonwealth as much in that space as I do some of the programs embraced by
States and Territories. But let's also recognise this: this is a very difficult area as well, to
bring about real outcomes.

On the Queensland point, I'll defer to the Queensland Premier.

BLIGH: Queensland is very pleased to see some additional federal money on the table for drug and
alcohol rehabilitation services. We've gone down the path of alcohol management restrictions in
every community in the Cape. And as I have demonstrated with data I have made public this week,
after three years of those restrictions, we're not seeing change at the pace we need to see it, and
that means putting further restrictions on, including possible prohibition, and the Queensland
Government will be putting resources into that. But to have that commitment from the State
Government matched by real dollars from the Federal Government is a great and welcome new addition
to this area of public policy.

But we also agree that we need to open our minds to doing things very differently. A lot of good
people have done a lot of work that has not benefited Aboriginal people and we need to be honest
about that and we need to be very frank with ourselves and with these communities. So, from our
perspective, having Indigenous issues on the agenda was very important. I thank the Prime Minister
and my colleagues for putting it on the agenda for the first time, and not only putting it on the
agenda but delivering a real outcome.

JOURNALIST: (inaudible)

PM: When it comes to the allocation of funding in the hospitals area, this is the one fifty you are
referring to, we had foreshadowed a total package there in the vicinity of about $600 million,
spread over the forward estimates period. This represents a partial bring forward of that and we'll
have to look, therefore, at downstream needs as a consequence of that.

In terms of the additional funding for drug and alcohol rehabilitation services in Aboriginal
communities in remote Australia, that comes from consolidated revenue.

JOURNALIST: (inaudible)

PM: We looked very carefully at, let's call it the whole range of supply side constraints in the
Australian economy at present, but there has been a failure in relation to this body in the past.
It's not been, and on the part of the Commonwealth Government, it's not been to embrace the
absolutely critical nature of skills shortage and infrastructure challenges in dealing with the
nation's inflation challenges. That's why so many of the programs we put forward prior to the
election, and which we will implement in Government, deal with skills agenda, it's training places,
education and universities, together with what we will do on the infrastructure side and the work
of Infrastructure Australia has already been referred to.

Obviously, we are very mindful of labour supply, and not just the supply of adequate skills within
the existing labour supply. We're also mindful of how do you boost the participation rate. And part
of participation rate increase which is necessary is reflected in our approach to childcare and
things of that nature. So, all of these supply side questions were touched on in our discussions
today, and I'll turn to Premier Carpenter to add.

CARPENTER: Yes, Andrew. This is an issue which is specifically difficult for us in Western
Australia, facing great challenges with labour supply, and we had the discussion. I raised the
issue of migration. It's another which the Federal Government is aware of, particularly in Western
Australia. There are some great sensitivities about this issue, obviously. It has to be dealt with
properly, thoughtfully and in a way which isn't going to be counter-productive. And as a result of
our discussion, I think that we can do that. The specific needs of Western Australia need to be
met, in my view, for the benefit of the entire national economy, but we need to do it properly.

JOURNALIST: (inaudible)

PM: I'll turn to Premier Brumby to answer that, as well as Premier Iemma, if they so choose, and if
any other Premier wants to chip in.

The key thing here, in our analysis of this in the pre-election period is that you're looking at a
mix of problems. One, it can often be, for example, the availability of a sufficient quantity of
day surgery facilities. That's one.

The second is the extent to which this funding can be used to purchase elective surgery services
from the private hospital system and from private practitioners. There are a mix of possibilities.
We've looked at these over some period of time.

But the reason I'm delegating, and the Premiers and Chief Ministers are delegating to our Health
Ministers and Treasurers until January the detailed implementation arrangements, is that we want to
get it as absolutely right as possible.

But I also want to put our bona fides on the table. This is a matter of real concern to people
right across the country. A lot of people out there, right now, heading into Chrisy who are waiting
for elective surgery. We actually need to do something about it. Over to the Premiers.

BRUMBY: Well, each of the States have different circumstances. Some have capital constraints, some
have operating constraints. In our case in Victoria, we have good capital. We have the Alfred. We
have the capacity for the throughput. So, it's largely been a money problem in the environment in
which we've been paying 60 cents out of every dollar under the AHCA agreement and the Commonwealth,
40. So, the additional funding will enable us to address those gaps. It will enable us to treat
more patients. It will enable us to shorten the hospital waiting lists. And as the PM said, in
January there'll be further discussions about the detail of that, including whether, of course, the
State itself contributes also to that extra effort, and the outcomes that we can achieve from this.
But I don't think there's any doubt this is a substantial new injection of funding. It is welcomed
by Victoria and by the States, and it will substantially reduce the elective waiting times, not
just in our State but across Australia.

JOURNALIST: (inaudible)

PM: I might just flick to Premier Iemma on that.

IEMMA: Well, the funding will essentially address capacity. And as Premier Brumby has said, some
States the capacity is infrastructure, for others, it's workforce, for others, the model of care.
So, it's the first time that we've seen the Commonwealth recognise, in the area of elective
surgery, of book surgery, a role outside of the normal AHCA agreement, and even then, recognise
incentives to continue to drive improvement. Now, in NSW, we've done all of those measures, as far
as purchasing off the private sector. So, where it will address capacity, we (inaudible) on to the
private sector, the private sector to undertake some of the book surgery.

Premier Brumby mentioned day surgery. In NSW, we've implemented an initiative that is similar,
(inaudible) 23 and a half hour wards. It's also addressing workforce. For example, operating
theatres having enrolled nurses assisting the scrubbing, non-registered nurses, and that addresses
a capacity issue, a workforce issue. In other hospitals, it's having operating theatres running
concurrently, as opposed to having one going.

Again, it's looking at the capacity and trying to remove the constraints to capacity - to, one, do
more surgery; two, improve the access to surgery and; three, reduce the waiting time and get away
from this arid debate about numbers on a list. We will always have elective surgery lists. They are
a mechanism to allocate resources. But having the surgery done in clinically appropriate time,
that's what people want and that's what we're addressing.

FOLEY: Can I just add, Prime Minister? Sorry, can I just add ...

JOURNALIST: (inaudible)

PM: Sorry, the Acting Premier.

FOLEY: Can I just add something very quickly? As a State Treasurer and an Acting Premier, I've
attended, as John Brumby and Anna Bligh have done, many Treasurers' conferences where we've had a
fairly sterile debate, a pretty singular debate with Peter Costello. What is incredibly encouraging
with what the Prime Minister has laid out today is that he's actually actively got State
Treasurers, State Treasuries, Federal Treasury working with Prime Minister's Departments, Premier's
Departments and Health Departments by actually knocking down the barriers of the Howard-Costello
Government had in place, between getting Government agencies working together. The fact that I'll
be flying, along with the State Treasurers, to Canberra in the second or third week of January with
Health Ministers to have a meeting convened by Wayne Swan, would have been unheard of over the last
10 or 11 years. That's how practical engagement between the Commonwealth and the State, for the
first time, I'm encouraged that we're actually going to do something serious about addressing the
long term health needs of the nation.

JOURNALIST: (inaudible)

IEMMA: The detail will be with the meeting in January. There certainly was a discussion, and there
was a very good discussion. Because the distribution of something that will be addressed, the
detail of which will be addressed in January. There was a recognition on the part of the Prime
Minister and the Commonwealth that we do have legitimate issues. So, recognition of prior effort
and recognition of current effort was discussed, and I'm very pleased. And my Minister will be
coming back in January with a very good submission.

JOURNALIST: (inaudible)

IEMMA: Well, we've already embarked on, for example, lifting the bed base at Royal North Shore. My
Minister announced a $50 million bed package about a month ago. In relation to nursing, we've
recruited 8000 over the last five years, and we'll continue to recruit to fill those 100 vacancies.

JOURNALIST: (inaudible)

IEMMA: Well look, those two in particular, which are the ones that have received all the attention,
one, over the last three years we've opened 1800 beds. Do we have a bed program currently funded
through this year's budget? Yes, we have. We supplemented that in the last month, and we'll
continue to open beds. But here's the point, given that we are talking about health reform: if
that's all you do, then you're not going to address the fundamental health needs. Because...

JOURNALIST: (inaudible)

PM: We're in the cooperative phase. And I'm of the view that we can spend this year productively
outlining two things, through the reform program which is outlined in the terms of reference under
both the Health and Aging Working Group, and associated with it, I draw your attention to the terms
of reference of the new proposed National Health and Hospitals Reform Commission, an important

I believe we have a great opportunity in 2008 to reach cooperative agreement on future
benchmarking, outputs/outcomes measurement and incentive payments. For those of you, reflected in
the renegotiation, or should I say the negotiation, the upcoming Australia Health Care Agreement.
It is a huge area of work for this year. So, in 2008, and I said this in the election campaign, my
first instinct is to achieve this outcome cooperatively. And I believe given the evidence of
goodwill that I've seen around the table today, that that can be achieved. But from the
Commonwealth's point of view, we have to achieve that outcome because the Australian people expect
that of us, and we've all got to zip. Thanks very much.