COAG grew out of the Premiers' Conferences, which had been held for many decades. These were limited to the premiers of the six states and the Prime Minister. A related organisation is the Loan Council, which coordinates borrowing by the federal and state and territorial governments of Australia. COAG was established in May 1992 after agreement by the then Prime Minister, premiers and chief ministers, and it first met in December 1992. It is chaired by the Prime Minister. It meets to debate and co-ordinate government activities between the federal and state or territorial governments and between the state and territorial governments themselves as well as issues affecting local government. COAG differs from the US's National Governors Association or Canada's Council of the Federation, because these bodies only include state/provincial representatives, whereas COAG also includes federal and local representatives. At a 13March 2020 COAG meeting, it was announced that a new National Cabinet was being formed of the Prime Minister and the premiers and chief ministers of the states and territories to coordinate the response to the COVID-19 pandemic in Australia. On 29 May 2020, Prime Minister Scott Morrison announced that COAG would be replaced by a new structure based on the National Cabinet.
Final membership
COAG and state finances
Australia is believed to be the first federation to have introduced a formal system of horizontal fiscal equalisation which was introduced in 1933 to compensate States which have a lower capacity to raise revenue. Many federations use fiscal equalisation to reduce the inequalities in the fiscal capacities of sub-national governments arising from the differences in their geography, demography, natural endowments and economies. However the level of equalisation sought varies. In Australia, the objective is full equalisation. Full equalisation means that, after HFE, each of the six states, the Australian Capital Territory and the Northern Territory would have the capacity to provide services and the associated infrastructure at the same standard, if each state or territory made the same effort to raise revenue from its own sources and operated at the same level of efficiency. Currently the funds distributed to achieve HFE are the revenues raised from the Goods and Services Tax, currently about AUD50bn a year. The distribution of GST required to achieve HFE is decided by the Federal Treasurer each year, on the basis of advice provided by the Commonwealth Grants Commission. Achieving HFE does not mean that the states and territories are directed how to raise revenue or how to spend their funds. GST revenue grants from the Commonwealth are unencumbered and available for any purpose. Accordingly, HFE equalises fiscal capacity, not fiscal policies which remain for the states and territories to decide for themselves. It does not result in the same level of services or taxes in all states and territories, direct that the states and territories must achieve any specified level of service in any area, nor impose actual budget outcomes in accordance with the Commission's calculations. At its meeting on 13 December 2013, COAG agreed to streamline the COAG council system and refocus on COAG's priorities over the next 12 to 18 months.
There is no longer a distinction between standing and select councils, as all councils are time-limited.
Criticism
In 2012 a group of 20environmental organisations released a joint communiqué denouncing the establishment of the COAG Business Advisory Forum and wanted wider representation on the Forum. The groups also opposed the weakening of environmental regulations. After the forum's abolition in early 2020, journalist Annabel Crabb wrote that, after initial utility in the 1990s, COAG had become a "sclerotic nightmare" producing "communiques of impenetrable bureaucratese". She suggested that the meetings in Canberra had produced a performative element in which state premiers sought to boost their profile at the expense of actual reforms.
