The states and the Commonwealth have agreed to historic health care reform and achieved a breakthrough on the National Water Plan at only their second formal meeting under the Rudd Federal Government.
The deals involving $1billion of Commonwealth funding in each area came after yesterday's meeting of the Council of Australian Governments in Adelaide.
Meeting with the leaders of all Labor-held states and territories, Prime Minister Kevin Rudd said he hoped that the realisation of yesterday's agreements would be "an exciting and substantive outcome for national economic reform through the COAG process in 2008".
The water deal breaks the 14-month stand-off between the Commonwealth and Victoria, with the state to receive up to $1billion of extra federal funding but with other Murray-Darling Basin jurisdictions, including the ACT, set to share in accelerated largesse at COAG's next meeting, in July.
The deal means Australia's food bowl will come under Commonwealth control for the first time in history.
Victorian Premier John Brumby said the agreement probably would not have been reached had Labor not won last year's federal election.
Mr Rudd said Labor had promised a year ago to end the blame game between state and federal governments if elected.
"And today what we have done is acted to end that blame game in critical areas including water, health and hospitals and also boosting the productivity of our economy," he said.
Federal Opposition environment spokesman Greg Hunt said the agreement was welcome but criticised Victoria's resistance.
"By delaying for over a year, the Victorian Premier has been an environmental vandal of the worst kind," Mr Hunt said.
The money for Victoria goes to the second stage of the state's Food Bowl program and comes with the promise of an extra 100billion litres of water flowing on out of Victoria through the Murray.
It is part of a new Memorandum of Understanding, attached to yesterday's COAG communique. The quid pro quo is that NSW, South Australia, Queensland and the ACT have been asked to bring forward priority water projects for which Mr Rudd has promised "significant and substantial" new funding under the $10billion National Water Plan.
Under the new health care plan, all states and territories have agreed to publish report cards on their public hospitals in return for a $1billion funding injection.
The deal, by including indexation for the first time, removes an obstacle that had proved insurmountable during the decade of the Howard Coalition government.
A number of premiers said that the states had been "dudded" for too long and that the Rudd Government's move was "historic".
However, they also said that it was only a first step in restoring the 50-50 Commonwealth-state healthcare funding split from the 40-60 blowout that had occurred over the John Howard years.
ACT Chief Minister Jon Stanhope said that the inclusion of indexation was a significant landmark in Commonwealth-state relations, adding that the ACT had budgeted for indexation at 7.6 per cent, slightly higher than most states.
Of the move to return to 50-50 Commonwealth-state funding, Mr Stanhope said, "There's going to be some hard negotiating needed and some time allowed".
The water and health care deals were the highlights of a COAG summit which also agreed to a national registration scheme for health care professionals and revamped Commonwealth-state financial relations, slashing the use of the controversial Specific Purpose Payments from 89 subjects to only five core areas.
Significant agreement was hammered out also on assistance for homeless Australians and 23 separate measures were adopted to benefit indigenous communities. The promised extra 50,000 health care training positions were confirmed and two new ministerial councils on international trade, and on ageing were established.
The water agreement makes the revamped Murray-Darling Basin Authority, which will now include the Murray-Darling Basin Commission, the arbiter of caps on water allocation.
The new health care deal will be based on two primary conditions: the national collection of data to allow proper comparisons of need and service delivery and an insistence by Mr Rudd that payments to the states be "activity-based".
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