The Federal Government has warned that it will consider withholding GST final rewards payments to states if they continue to delay key elements of the proposed COAG reforms to create a seamless national economy.

 

Implementation of reforms such as the harmonisation of work health and safety laws is causing friction between the Federal Government and, in particular, the Victorian and WA governments, while Victoria and New South Wales have antagonised the Gillard government by proposing their own reform agenda.

 

The premiers of Victoria and NSW signed an "Interstate Reform Partnership" agreement in December to "jointly accelerate economy-boosting reforms between Australia's two largest states, especially in the areas of energy efficiency and skills."

 

In an attempt to spur the states into action on the COAG reform agenda, the Federal Government has threatened to withhold $450 million in GST payments to the states, arguing that the reforms would save businesses and consumers an estimated $4 billion per year.