The Commonwealth Grants Commission, an organisation created in 1933, should be reviewed. Currently the CGC employs about 50 staff to determine the distribution of $50 billion or 14 per cent of the Commonwealth budget. Compare this to the thousands of public servants working at the Departments of Treasury, Finance, Prime Minister and Cabinet and program delivery agencies who agonise each year over the remainder of the Commonwealth Budget. The Reserve Bank provides a model for consideration to renew the CGC. While the CGC is already an independent statutory body, it does not have the research clout or profile of the Reserve Bank of Australia (RBA).

With a larger research team, regular briefings to industry leaders, a high profile board and regular announcements, the CGC could meet the expectations of an organisation with such weighty responsibility. The current basis for distribution of GST revenue should also be reviewed. Rather than being based entirely on need, the process should provide the incentive for good government by basing a proportion of payments on efficiency or reform. The National Competition Policy payments under the Howard Government, where states were rewarded for reform, provide an example of how this can work. These and other solutions to our inefficient state revenue sources need to be considered at the 2011 tax summit. The coincidence of the evidence from the Henry Review, a new Government and broad support in policy circles means that now is the time, a sweet spot, to complete the unfinished business of tax reform in Australia.