The Council of Australian Governments is meeting in Canberra today, as some critics call for it to be killed off. Is its time up — or can it be saved?

Queensland Premier Campbell Newman labelled COAG yesterday a “dysfunctional farce”. The president of the Business Council of Australia, Tony Shepherd, told the Press Club on Wednesday that “despite the best of intentions, COAG has failed … Let’s replace COAG and revert to a strategic first ministers meeting, and powerful ministerial councils that have served us well in the past.”

COAG is indeed in trouble, and the people questioning its value have a point; I have some suggestions for how the situation could be improved. First, some background.

COAG aims to make our federation work effectively. Australia, like it or not, has a federal system. The Commonwealth government was created by agreement of the states. The Australian constitution can only be changed if both a majority of the people and a majority of the states agree: so realistically, federation is the model we’re stuck with for the foreseeable future. The challenge is how to make it work.

Federations are a preferred governance model worldwide. There are benefits in being one country, but also in more devolved decision-making. Ideally a federation allows the best of both.

However, Australia’s federation is unusual in that it concentrates a huge amount of financial power at the centre. Since the end of World War II, when the Commonwealth took over tax powers from the states in order to fund post-war reconstruction, the different levels of government have been fighting over dollars.

For most of the time allocation of money from the GST to the states and territories is a routine business overseen by the Grants Commission. The tricky bit comes when the federal government wants change from business as usual. Almost every attempt at national reform, even if there is agreement on principles, reduces down to a fight over money.

Every 10 to 20 years years Australia tries to address the problem of how to achieve necessary reforms at an affordable price. COAG is the latest such attempt. In its early years it was productive and useful. Today, many are questioning it.

“COAG started well, but has become burdened down with its own weight of processes and expectations.”

The problems faced by COAG are partly political. We have a new generation of state premiers who have no investment in COAG and no particular desire to help it succeed. They include not just Newman but figures like Colin Barnett from Western Australia, a state that has always harboured secessionist sentiments. While Labor states are more likely to lend a hand to help their federal colleagues, even their commitment to COAG may be lower than when it was founded.

COAG itself has not helped its cause by loading up its agenda with too much business, and failing to leave ministerial councils to solve sectoral issues alone. Australia has always had regular meetings between Commonwealth and state/territory ministers about their own subject matters. For most of our history such councils have worked without central direction (except where they failed on some vital policy issue, at which point the prime minister and premiers intervened).

The reporting about today’s COAG meeting might lead you to think that it is only about Gonski, but the communiques from past meetings suggests the usual agenda is a long one. For example, at its last meeting COAG discussed: the National Disability Insurance Scheme, schools reform, mental health reform, regulation and competition reform, environmental regulation reform, energy market reform, a seamless national economy, national occupational licencing, the Australia in the Asian Century White Paper, the Royal Commission into Child S-x Abuse, royal succession rules, the radio frequency spectrum, interruption to telecommunications services, better value infrastructure and GST distribution.

These are all important, of course: they would not be on the agenda if they weren’t. But just reading the list is exhausting. Pity the poor COAG members who are expected not just to read the list but to think through each of these issues and make good decisions on all of them.

COAG started well, but has become burdened down with its own weight of processes and expectations. That is not a criticism — it always happens with institutional reforms as they develop and mature.

Australia is not good at mature debate that recognises the life-cycle of institutions and calmly deals with this reality rather than point-scoring. If however they can ignore the temptation to cast political aspersions, the jurisdictions have choices about how to address the problem.

COAG could be made to work better with a tighter agenda, more devolution of decision-making to portfolio ministers, and better performance reporting through the COAG Reform Council. That is one reform direction. Or it could, as suggested by the BCA, be done away with — although more thought would have to be put into the detail of what exactly could be done instead. Either way, now is a timely opportunity for the federal compact to be refreshed.