Canberra

E & O E - PROOF ONLY

PM: The first thing I'm going to do is sign and then hand over to my colleagues an agreement about the National Disability Insurance Scheme. This agreement will be signed by all states and territories and it's committing all states and territories to learn from the launch sites.

So we have reached agreement for launch sites around the country in Victoria and New South Wales, in the ACT, South Australia and Tasmania.

Those agreements are between the Federal Government and individual jurisdictions. This agreement means even those places not participating in launch arrangements will learn from the launch arrangements, so this will be shared work.

As people are aware, yesterday the Premier of New South Wales and I executed an agreement which commits us to the long-term arrangements for the scheme, and I will be working with state and territory colleagues to secure with them such an agreement for the full rollout of the scheme.

But I'll just sign this multilateral agreement and pass it through as we do the rest.

So can I thank my state and territory colleagues for the further discussions we've had today on the National Disability Insurance Scheme.

I'm pleased that we've been able to make progress on the launch arrangements, I'm pleased we're all going to learn from the launch arrangements and I'm very pleased that New South Wales and the Federal Government have come to an agreement about the long-term funding of the National Disability Insurance Scheme in that state.

This is important to people with disabilities today; it is important to all Australians for tomorrow because any of us or any member of our family could at some time during their lives be struck with a disability and need the care and support of their nation and their community.

Today we have also worked on electricity prices. This is a big issue for Australian families and for Australian businesses.

People have seen rapid escalation in the power prices, and that has put a lot of pressure on people's cost of living. At the last COAG meeting there was a discussion about the pressure that this was putting on families.

In August this year I said I would bring to this meeting of the Council of Australian Governments a plan on power pricing.

I'm pleased today we have reached agreement on such a plan.

And the agreement that we have reached will make a difference of $250 for Australian families on power pricing. We know that figure from Productivity Commission work.

In summary what's been achieved today is that we will be addressing the gold plating of the system and overinvestment in the poles and wires.

We will be hearing the voice of consumers at the centre of how we design the market for electricity.

We will be working with consumers to give them more options and choices about how they consume their power.

We will be introducing rewards into the system so that big users, big businesses can moderate power loads that they put on the system during peak times, and we will be ensuring that there is an empowered regulator who can deal with the rules of the road, the rules of this market.

We have lifted ambition from the work that was done by energy ministers. They did a lot of good work, as did the Business Advisory Forum taskforce.

We have lifted ambition in the room today on these power price reforms, which will make a difference to Australian families, and will make a difference of $250 a year for the future.

Third, we have discussed today and between First Ministers over the course of COAG the Royal Commission into child sexual abuse in institutional contexts.

This is a very important piece of work for the nation. We are working together discussing the terms of reference for the Royal Commission and we will continue that work and issue the terms of reference before the year is out.

We do want to start what will be an important Royal Commission for healing for members of our community and an important Royal Commission to learn lessons for the future.

Amongst the various things we have discussed as leaders, we have discussed the lessons learned by state-based inquiries being brought to the table in the course of the Royal Commission.

So very quickly we will see come to Canberra people who have worked for inquiries in states and territories bringing their learning and their insights to Canberra as we are structuring the work of the Royal Commission here.

We have agreed that we will work cooperatively on this. The Federal Government has made it clear that we will bear the costs of the Royal Commission, but we will be working cooperatively with jurisdictions with some in-kind support looked to as the Royal Commission gets about its work.

In addition, there is a predisposition by First Ministers here to issue letters patent. What that means is that the powers of the Federal Government can be bolstered by the powers of state governments - the legal powers - for the Royal Commission's work.

So that would give the Royal Commission that the Federal Government is creating the maximum legal power and backdrop to get about its work.

I want to thank First Ministers for their cooperation on what is a truly important piece of work for the nation.

We have discussed a number of other issues very briefly. We worked through the outcomes of the Business Advisory Forum yesterday. We had a discussion about school improvement. This will be the work of COAG in 2013, and education ministers are talking about the National School Improvement Plan today.

We have determined to release a ten-year roadmap for mental health, an important area of healthcare for the community, and we've talked today too about cooperating on arrangements for the Royal Succession.

This is achieving the aspiration here in our nation that for the future of the Royal Family, that men would not be given preference over women in terms of who becomes the monarch, and we would remove the embargo that there is at the moment of a Royal Family member being or marrying a Catholic.

So we have got on with some very important work. I will turn now to the Premier of South Australia in his capacity as chair of the Council of the Australian Federation, the group where states and territories meet, and then we'll take your questions.

PREMIER WEATHERILL: Thank you Prime Minister.

I want to focus on three areas of the work that COAG undertook today; the National Disability Insurance Scheme, the energy market reforms and the Royal Commission into sexual abuse.

Each of these matters are fundamentally directed at protecting vulnerable Australian citizens, and so the work of COAG, the cooperation that existed between the Australian Government and the state and territory governments could not have been of more importance. And in each of these areas we've achieved substantial gains.

In relation to the National Disability Insurance Scheme we are now free to embark upon the launch sites which will inform the ultimate shape of this scheme.

To give you some flavour of the launch sites, in South Australia we have signed up to a launch which is based on a children's model. That is from birth to age 14, we're going to be trialling the effects of that so that it can inform the broader national scheme.

We know that about 30 per cent of the national disability insurance population are children, and of course intervening early is fundamentally important to determining the life trajectory, the health and wellbeing of young people as they seek to live in a world with disability.

This will be phased in over three years between 1 July 2013 to 30 June 2016, and of course the South Australian Government has made a contribution, $20 million, and the Commonwealth Government has also made a substantial contribution to bring this about and this will assist us to inform the ultimate scheme that will begin in 2018.

Can I also make some remarks about the energy market reform.

The reforms that we are introducing today are directed at giving primacy to affordability for consumers at agreed levels of reliability to take into account all of the considerations that exist across the national electricity market; those regional considerations that throw up different results in different parts of our Commonwealth.

The reason why we've had to sharpen up the rules for the national electricity regulator is that as the national electricity regulator attempts to protect consumers, they keep getting upended in the courts.

So we need to change the rules so that they can protect consumers so that we have an electricity market that works not just for the big end of town but for the consumers that use the electricity market.

Another important element of this will be the demand side. We know that by sending the right signals to consumers, they can make choices about how they use electricity.

There's some important technologies which are emerging which will assist us to drive down electricity prices.

Some of them are smart meters, some of them are devices that can be attached to air conditioners which make little or no difference to the use of air conditioners during peak times but make a dramatic difference to the amount of electricity that's being used during peak time, which in turn has a dramatic effect on electricity prices.

These are the intelligent technologies which are now being explored which can make a massive difference to electricity pricing.

The third thing we want to talk about is the Royal Commission into sexual abuse.

South Australia has had a very substantial experience in this regard. We had an inquiry into child sexual abuse in relation to children in state care, and we paid careful attention to the way we constructed that inquiry and we learned a number of very substantial lessons.

One of the lessons that we learned is that we cannot afford to have another inquiry that just produces an enormous report that sits on a shelf somewhere gathering dust.

What is crucial to an inquiry of this sort is that the process allows those people who have survived child sexual abuse to have an opportunity to respectfully be listened to about their stories.

That is something that has often been denied them; denied to them because they felt guilty about coming forward in the first place; denied to them because often the first person they raised it with either didn't believe them or concealed it from the appropriate authorities; denied to them because people were embarrassed because they couldn't bring themselves to believe that such a horrible thing could happen to a child.

So many of them have live with guilt for years and have suffered the consequences of that, so the absolutely crucial message out of what we learned is the process of the inquiry is as important as any of the recommendations it may make for the future.

So we paid a lot of attention to that and we're going to work, all the jurisdictions will work cooperatively with the Commonwealth to ensure that we have a first-class inquiry that assists those people who have suffered these horrible incidents to heal.

PM: Thank you very much. We'll take questions now and I'll try and direct a bit of traffic, so on your best behaviour.

JOURNALIST: Two questions about energy market reform. The first is the new reliability standards, is it clear that they would be lower standards than before, or if they're not lower then how will that save money by cutting back on investment?

The second question is about the $250. As I understand it, the Productivity Commission said that might be the maximum future price rise that would be avoided if we had a mandatory rollout of smart meters and time of use pricing, but as I understand it that's not what you're doing?

PM: There's a range of elements here. To take your first question, we will have national standards set by the relevant body but we have specifically said we want those standards set with a focus on consumers.

And what we're dealing with here is a situation where we've seen $11 billion of infrastructure rolled out to deal with peak loads on four days of the year. But every day people are paying the price of that infrastructure in their electricity bill.

We believe we can do better than that. We believe that some demand management techniques will make a difference to that.

Now often in the public space that plays out about the choices of individuals, and yes, individuals with more information about their power usage may choose to make some different choices about how they use power.

But actually it is very much about the big users, big businesses, and how much demand they are putting on the system at peak times.

So you'll see the wording in the communique but the focus of the standards that we are looking for are ones that really take a view about the perspective of Australian families and the costs that they're paying in their power bill. The Productivity Commission figure is generated form a range of reforms.

Yes, the details of some of the things that are being discussed here are different. For example, Premier Weatherill has gone to the ability to roll out other devices than smart meters which are newer technology which have got the ability to help individuals make choices about how they use their power.

But when you look at this combination we believe it will be effective to make the same kind of difference for future pricing and what that means for Australian families is bills different to what they would have got if we hadn't set out on this path.

So I am pleased having raised this issue very forcefully in August, that here we are in December agreeing to a plan for change which will make a difference for Australian families.

JOURNALIST: Prime Minister, can I just clarify, are bills going to go down as a result of these measures and how soon will these measures take effect in terms of seeing that in a household bill?

PM: I've been clear about this as I've described my plan to people. This will make a difference for future power price determinations. It will make a difference for what people pay in 2014. It will make a difference for the long term.

JOURNALIST: Prime Minister, the communique on energy, in that section, says it will take a sustained commitment over time. Can I ask is there a deadline in any of the agreement in terms of when a national agreement would be reached?

And I'd also like some comment from the state Premiers as to whether there's any acceptance of the need to install smart meters for instance, given the experience in Victoria with cost blowouts?

PM: Well I'm happy for the Premiers to get into that discussion but I would remind one of the things that Premier Weatherill talked about was the broader range of devices that are available. We've made some direct agreements today which will be actioned from here on power prices.

Then you will see in the communique there is some work that needs to come back to COAG during the course of next year. But we did, from what energy ministers discussed at their meeting, lift ambition in the room to get more done to make a difference for power prices.

I'm happy for any Premier or Chief Minister who wants to reflect on the rollout of devices that give consumers information. Maybe Jay might have to do that.

PREMIER WEATHERILL: Yes, well just to go into a little more detail about the proposition that we were advancing. We believe that smart meters should be an option but not compulsory.

The particular technology that we're talking about goes to the question of the use of air conditioners which is the fundamental cause - one of the fundamental causes - of peak demand at least for householders.

The technology in question's being trialled in South Australia at the moment involving 5000 households. It concerns essentially load shedding for compressors so the air conditioner continues to circulate the air.

It makes almost no difference to the ambient temperature - about half a degree - because it shuts off the compressor for one minute in every hour.

Across the whole system though, that leads to an enormous saving of electricity during peak demand and gets you a very effective and efficient way of actually reducing power use during peak demand.

We're obviously concerned about some demand measures which might place pressure on vulnerable consumers, especially if they happen to be forced to make decisions, their own choices about how to do things, when to do things, based on some metering arrangements.

I think we need to look carefully at what the effect would be on a vulnerable consumer by moving to some of these differential tariffs and metering. We think this is a technology that is likely to be very beneficial, so the overall proposition is that we should look at demand side measures. We shouldn't be exclusive as to which technology might give us the outcome.

JOURNALIST: Was there any discussion today around the table at all about changing the GST in any way, shape or form, in particular about the threshold for overseas online, and can I also just clarify, in the communique I couldn't see any mention of the inquiry into construction costs. Where's that at?

PM: I can address both of those and I suspect Premier Baillieu will want to say something as well.

On the first of them, there was some discussion in the room about the GST, as you're aware, the Federal Government will not be changing the rate or the base of the GST. There has been a taskforce into low value purchases and GST arrangements. Minister Bradbury's dealt with that publicly and has indicated that the costs of changing current arrangements outweigh any revenue that would be gained.

JOURNALIST: Was there consensus around the table?

PM: Just the Federal Government position on what was discussed in the room, that taskforce has a final report in 2013.

On construction costs, the Federal Government's taking the view we are prepared to have such an inquiry where there's some - I don't want to use the names of individuals - but there's some disputation about who makes up the panel and that would need to be resolved for the inquiry to proceed.

Ted, did you want to say anything?

PREMIER BAILLIEU: When it comes to the online GST I think there were a range of view around the table. I won't speak for others. I think the members of COAG would look forward to that taskforce returning its advice.

When it comes to construction costs we are committed to an inquiry on construction costs and I believe that's the view of the majority of states and jurisdictions.

We are committed to it proceeding on the basis that COAG determined last time round to the extent that there's a stumbling block it involves the panel members, COAG determined last time around that those panel members should be agreed by COAG.

Jurisdictions have nominated people for those positions. We have nominated people for those positions. Those we have nominated have not received any objections that I'm aware of. Others have nominated others.

They are not agreed, and we have had that discussion again today and it would seem the Commonwealth and at least one jurisdiction do not wish to proceed unless their nominee is agreed.

PM: Right, well that's an insight into COAG processes for you. Phil Coorey and then Michelle Grattan.

JOURNALIST: This may be a little bit cheeky, we might be able to do it by a show of hands, but is there any Premier or Chief Minister who does not support at least reviewing the rate or the base of the GST?

PREMIER NEWMAN: Our position is we don't favour an increase in the rate, put it that way.

JOURNALIST: What about the base?

PREMIER NEWMAN: The issue of the online purchases, I think that is something that's worthy of consideration because it is presenting significant revenue leakage in the future and it's only going to get worse and I think ideally that would be confronted, although the Prime Minister I think has spoken to us about some of the real challenges of dealing with that in terms of how that might work, so it is difficult to do that.

JOURNALIST: Could I ask Mr Baillieu when you think Victoria might sign up to the disability agreement - bilateral agreement - what is the problem of doing that immediately and-

PREMIER BAILLIEU: We just signed, Michelle, to the launch. We're very pleased about that.

JOURNALIST: What about the funding agreement?

PREMIER BAILLIEU: We're very pleased to have signed up to the launch. We have been champions of the NDIS. I do note that what we have signed with all our signatures on it doesn't actually refer to anything other than an agreement.

It's an interesting piece of paper which we've just signed. But we will continue to work with the Commonwealth with a view to establishing a sustainable model for the NDIS and we want to proceed with the NDIS, we believe it is in the interests of all Australians.

But it needs to be on a sustainable basis. We'll continue that.

JOURNALIST: But when do you think you might be able to deal with funding and why are you behind New South Wales?

PREMIER BAILLIEU: Well I don't think we're behind anybody. We've actually been out in front on these issues, Michelle.

If you go back to before the last election we were out in front on these issues. We advocated for a trial in the Barwon region and last COAG there was a bit of noise after that COAG around the launch conditions in Victoria.

I can assure you that we signed up on the terms that Victoria had proposed for that launch. We're pleased now to have signed up to it today, and we'll continue to work with the Commonwealth and other jurisdictions on a sustainable outcome for the long term.

JOURNALIST: Has it got a funding-

PREMIER BAILLIEU: Well I can't give you a date Michelle, I'm sure we'd all love to give you a date.

JOURNALIST: Prime Minister, on the pressing issue of the day, the Royal Succession. Is there unanimity among all First Ministers to change the law so that men don't get an advantage in the system from women and if there are any hitches from any First Ministers can we get any clues as to what they might be?

PREMIER NEWMAN: I don't think there's any issue about the changes that have been contemplated.

JOURNALIST: Why wasn't it settled today, why are you seeking further discussions about this? The communique says you have more work to do on it.

PREMIER NEWMAN: Because there are some different ways we can do it.

JOURNALIST: Why? What are they?

PREMIER NEWMAN: Well Queensland has a view that others don't agree with.

JOURNALIST: What is that view?

PREMIER NEWMAN: Well our view is that we will pass legislation in accordance with our position as a separate sovereign state. We're a federation of states, we're going to do it the right way, the proper way and that's our view.

PM: Perhaps if I can assist here. The advice that the Federal Government has very loud and very clear is that there is one crown in Australia.

Obviously that one crown plays a variety of purposes - Governor-General, Governors - and that the way in which we should deal with this, the most legally affective way to deal with it is that states would pass legislation referring to the Commonwealth the ability to make these changes to succession.

For that to be a legally effective process all states have to do it. If one state doesn't do it then it doesn't work. We are continuing some discussions in that regard.

JOURNALIST: (Inaudible)

PM: Well there's some legal advice about what's affective for the one crown in Australia and that's the legal advice that the Commonwealth has.

JOURNALIST: Are you the only Premier with that position, Campbell Newman?

PREMIER NEWMAN: It seems so. It's the advice I've received from my Attorney-General and it's the position of my Cabinet so, I'm being true to that and I'm being true to their views on the way forward on this.

And it can be done the way we're saying and it achieves the outcome which is as the Prime Minister described earlier.

So we're not disagreeing with what we'd achieve here. We're not going to discriminate against anybody, there you go.

JOURNALIST: (Inaudible)

PREMIER NEWMAN: We're always happy to look at things again.

JOURNALIST: And you're willing to stymy it?

PREMIER NEWMAN: No, no, no, hang on. No, no, no, you're missing the point with the greatest respect.

It doesn't stymy it, it's just that we believe the end objective is achieved by the states passing their own legislation and the Commonwealth and that's the advice I've had.

Anybody who goes away and says today we're against this happening, not true.

We want it to happen; we believe that it should be done in this particular way because that respects the issue of the federation of states.

JOURNALIST: (Inaudible)

PREMIER NEWMAN: No, it's the principle of the thing.

JOURNALIST: So you want each of the states to pass their own legislation rather than the Federal Government?

PREMIER NEWMAN: That's right. The Commonwealth had a position that there was another half-way house as well which we might have a look at.

JOURNALIST: Prime Minister, could I ask two questions; one to you and one to the Premiers in the non-resource states?

Could I just clear up, if growth gets below trend are you still committed to a budget surplus? And to the Premiers in the non-resource states are you concerned that the Federal Government's push for a surplus is having an impact on your economies?

PM: As I would have said to you in any other press conference when we're not joined by all my friends from the states and territories, we dealt with these matters in the Mid-Year Economic and Fiscal Outlook and we stand by the figures in that statement. Now in terms of non-resource states-

JOURNALIST: Mr O'Farrell, Mr Baillieu?

PM: They do a fair bit of mining in New South Wales as it happens.

PREMIER O'FARRELL: We do. It contributes more than a billion dollars in royalties each year, thank you very much, the mining industry.

Sid, can I make the point that what worries me and my colleagues more than anything else is the state of revenues, particularly GST revenues, $5.2 billion down, state revenues down, increasing demand for services at a state level.

There is no doubt that with in the national economy states are the losers because we have the demand, we provide the services and of course in a national economy with increasing reliance upon GST as it was occurring, when GST falls we suffer.

JOURNALIST: Prime Minister, some of your colleagues are worried about the damage being done to Labor because of the New South Wales ICAC investigation. What's your message to those voters who are turned off Labor because of these allegations?

PM: I'm not sure that's a question about COAG.

JOURNALIST: Prime Minister, will you be disappointed walking away today not having any other states signed up for the full rollout of the NDIS?

PM: No, I'm delighted that we entered an agreement with New South Wales.

I did not expect Premiers and Chief Ministers today when we only announced that agreement yesterday to be in a position in 24 hours to fully analyse it and understand what that benchmark meant for their state.

But I will be saying to my colleagues assembled here, the fact that we have got this done with New South Wales means that we can now work through with other states and territories and reach long term agreements about the National Disability Insurance Scheme.

JOURNALIST: Prime Minister, how serious can the closing the gap program be when placing like the Northern Territory and WA have an unacceptably high level of incarceration rates?

And also, the second question would be, Paul McClintock earlier suggested that he was quite concerned about the dropout rates of Aboriginal students in secondary schools.

What kind of guarantees can the First Ministers provide that they do their best in this but those two question please?

PM: Well neither of these matters has been under direct discussion today. That doesn't mean that they're not important matters but we're obviously principally here to report on what's happened in this COAG meeting.

On circumstances for indigenous students, we are working together and have been for some period of time now on a national action plan for indigenous education - it's part of a broader suite of school reforms where we are trying to close the gap in literacy, numeracy and year 12 attainment because we don't want kids to drift away from school.

We don't want indigenous kids to drift away from school and we know if people do drift away from school that that can be the first step on what becomes a lifetime of disadvantage.

We are working together and operating some very effective programs, things that integrate sport into school including Clontarf and other programs that are making a difference to retention rates.

So we're on a vision here about closing that gap and it's something that all jurisdictions have been working on.

PREMIER O'FARRELL: Can I just add, Prime Minister, which is to characterise incarceration rates of Aboriginal and Torres Strait Islanders as high only in the Northern Territory and Western Australia understates it.

They're high in every state of the nation. It is a national disgrace and most of us are working hard to try and rectify it.

JOURNALIST: How much discussion was there on the advice regarding school funding and how was that advice received?

PM: Today, we had a brief discussion about the school funding reforms because I indicated to my colleagues that I want to make that central work to the first COAG meeting next year.

We are in the position where education ministers are also meeting today and so we are working on the National School Improvement Plan. Education ministers were discussing that today themselves.

We want to get the benefit of that work and we want it to be a centrepiece of COAG discussions next year.

I know that there has been some very silly attempts today to try and suggest that you weigh the worth of things by number of minutes talked about in the COAG room.

Only someone who is a fool with no plan would take that kind of approach.

JOURNALIST: On environmental regulation, what convinced you that the bilateral agreements to reduce duplication and streamline those processes were not the way to go, and were there any Premiers who felt they had done a lot of work and were close to getting an acceptable standards for approvals of major environmental, resources and other project and were then disappointed that the Commonwealth walked away from that approach?

PM: Well let me say on behalf of my colleagues and they may also want to add, jurisdictions have done a lot of work, there's no doubt about that. Jurisdictions have done a lot of work and I thank them for it.

But it was also clear as that work got done that we were in a situation where jurisdictions were taking a very different view.

We had some states that were looking at 25 per cent of decisions being in these arrangements.

Some states that were looking at 90 per cent of decisions being in these arrangements and I became increasingly concerned that we were on our way to creating the regulatory equivalent of a Dalmatian dog and that, for businesses, that would be the worst of all possible worlds.

There would be legal risks and more litigation. You would have projects that were identical around the country the subject of different treatment and that wasn't an outcome that I thought was good in terms of business processes.

Also the Federal Government always has its eye on high environmental standards and the legislative certainty that comes with high environmental standards.

So we are going to continue to work on this area. Indeed we've agreed some things today which I think are important.

The Federal Government has indicated that we will legislate the changes arising out of the Hawke review.

These were very warmly welcomed by the business community when they were first announced and they will make a difference.

We will work together. We've already worked together to try and deal with the spectrum of sequential assessments and to get parallel assessments.

We'll now take a further step about making sure our bodies and agencies doing assessments are looking for the same data set and asking the same questions instead of businesses affectively having to do two sets of documentation.

And we will keep working with our state and territory colleagues on further changes to make sure we achieve twin goals here of streamlining for business and high environmental standards.

PREMIER O'FARRELL: And the alternative view from a disappointed Premier is that we could have engaged in the same sort of bilateral approach as we had in relation to NDIS.

In other words, for Commonwealth and State officials to work together to satisfy themselves that we were going to protect the highest environmental standards but do so in a way that was to reduce the burden upon business which of course creates jobs that our communities so desperately want.

That could have been done on a state or territory basis and the Federal Government could have obtained its powers in those other states that it didn't believe had come up to the mark.

That's the disagreement but we're happy to continue to work because ultimately if we want to go out of the economic hole we're in the resource projects are the major projects that are important.

And the only way to compete there is to reduce the cost of regulation.

JOURNALIST: Are the other states ready to sign up?

PREMIER NEWMAN: If what the Prime Minister outlined occurs, if what's in the communiqué occurs that's great, that's all we want.

But I do say that we are disappointed in Queensland with the progress over the past eight months and that's what I said today.

So there are some things that are on the table that the Commonwealth are going to do and then we do move forward and I look forward to seeing that.

JOURNALIST: A couple of questions for Premier Barnett.

On energy reform, do you because of WA being outside the NEM do you believe that it's achievable, the $250 reduction in tariffs for WA consumers and did you bring up the problems that the GST carve-up and the report from Greiner and Brumby is continuing to cause WA?

PREMIER BARNETT: Can I just make the observation that the current problems in the energy sector are the result of the last round of industry reform. We shouldn't forget that.

I don't think you'll see a $250 reduction and I guess as the Prime Minister was saying, if some of these changes are made then hopefully future price increases will be less than they would otherwise have been.

On GST, I am disappointed with the report. It was set up to deal with an issue that I had raised and that was a mismatch, if you like, a dysfunctional Grants Commission process that was no longer serving the country and it failed to address that.

I understand the position of the smaller states but if you get a scenario where Western Australia gets arguably in two years' time less than 30 cents in the dollar when every other state is getting well over 90 cents, you've got a dysfunctional Federal-State relationship and basically Western Australia doesn't have a relationship with the Commonwealth.

I don't think that's in the best interests of this state given that most of the investment and probably most of the employment growth happens to be in Western Australia.

And while I've got the floor if I can just comment quickly on the green tape issue; I think we went backwards today.

The work that was going on at an officials level was going in the right path and I would hope that the Commonwealth would be more trusting of the states to deal with environmental assessments including biodiversity issues because what this is doing is diverting Australia's scientific and financial effort on biodiversity into minutiae, whereas the real threat to biodiversity is feral plants, feral animals and the like. That's not getting the attention.

We're putting a huge resource into in think minor issues and Australia does have good and high environmental standards.

The Commonwealth would always have the right to call a project in if it thought it was not going properly. But look around Australia now, major projects have the world's highest environmental standards.

JOURNALIST: Mr O'Farrell, do you think New South Wales consumers are going to avoid $250 in future power bill rises?

PREMIER O'FARRELL: Well I certainly hope so. We are in the process of saving $400 million across our energy companies.

That's been returned in our income rebates with capped dividends. We're engaging in a range of savings. We'd like Fair Work Australia to apply the same 2.5 per cent wages cap to the workers in the sector employed by public corporations.

These would apply to other public sector agencies in New South Wales.

Look, I think every State and Federal Government is determined to try and do what we can to keep power prices low.

That includes in New South Wales getting rid of green schemes because of the costs that they add to consumers who often don't get the benefits directly of those green schemes.

JOURNALIST: Premier, are you confident that the new reliability standards won't lead to any brownouts and that they will be able to sustain peak demand?

PREMIER O'FARRELL: Ultimately if you look at the issue of gold plating it does go to reliability and it goes it reliability on a number of days a year.

So the key is going to be to ensure that you don't dumb-down or dumb-up in a sense in a way that going to hurt individual communities. I think that's the challenge that we have until the end of next year when decisions are made.

JOURNALIST: Mr Baillieu, just getting back to my earlier question on the surplus and the impact on Victoria, I think you wanted to say something? You opened your mouth.

PREMIER BAILLIEU: I was going to make a couple of points.

If you look around the states and territories now we all are challenged financially. The aggregate position across the states and territories at the moment, the operating balances are between eight and nine billion dollars in deficit.

We face significant infrastructure shortfalls that we have to find ways to fund. We face demographic change and shifts which will significantly change the demand profile for services in the future.

Decisions and policy positions proposed by the Commonwealth are set to impose expenditures on the state of up to $50 billion over four years.

That's a very significant set of challenges and so we are very conscious of that.

I think the discussion amongst the states has been one where all states and territories are conscious of this position.

We've sought to address our expenditures. We're keen to see those expenditures addressed across the board.

When it comes to the Commonwealth surplus position the Prime Minister is keen to remind us that we all make our choices.

I'd simply make the observation today, December the seventh, cheques go from the Commonwealth into the pool for Victorian hospitals and for other hospitals through other states and the cheques that have gone from the Commonwealth today into the pool are less than the cheques that went in November.

And that represents in this financial year $107 million withdrawal of funds and over four years some $470 million plus.

That simply adds to the challenge that we all face.

PM: Well I don't like to argue with you Ted but just let me argue with you.

Of course, we don't accept the figures about $50 billion, that's clearly untrue.

This is a Federal Government that has a tax-GDP ratio that is less than when this Government took office and took over from the former Howard Government.

Tax is less as a percentage of GDP, spending is less as a percentage of GDP and there has never been more money flowing from the Federal Government to the states than there is now including in healthcare where Victoria, over a three year period can look for a more than 20 per cent increase, indeed will be better off by around $900 million.

That's a direct outcome of the healthcare agreement I struck with states and territories.

JOURNALIST: This morning you said you wanted the energy regulator to have more teeth and be separate from the ACCC. How did discussions go on that?

PREMIER BAILLIEU: I think the energy regulator is still a bit gummy.

We would like to see the energy regulator separated from the ACCC. I don't think everybody around this table shares that view but that's the view of the Productivity Commission, the view of other organisations who have looked at this.

So I think the communique and the decisions of COAG were to have a further review of that.

We would like to think that Victoria has been at the cutting edge of energy market reforms for some time going back to the years of the Kennett government.

In those days, those reforms were not supported by many on the other side of politics but they have since been supported through Victoria and we've been part of the energy market development - privatisation, deregulation, the rollout of demand side equipment and we think that's important but it's important to get the education side of that right.

And it's important to get the flexible pricing right in the sense that that's where the option ought to be whether consumers adopt flexible pricing, that giving them access to it is part of it and educating them about that has got to be part of it and they need to be supported in that regard.

And when it comes to protecting vulnerable consumers we've rolled out across the calendar a 17.5 per cent energy concession and that's pretty significant.

So we're disappointed that we haven't got there yet with the energy regulator. My view is that it is inevitable.

We need to have a regulator that is capable, resourced and forceful in sticking up for consumers and we have sought that over the last two years.

We've been effective to some degree in terms of pushing particular issues to the regulator but an independent regulator would be much better. Let's give him some teeth.

JOURNALIST: Was there anything that you all agreed on?

PREMIER O'FARRELL: Yes, we're very happy that William and Kate are expecting a child.