The national cabinet has abolished the Council of Australian Governments and will redraw the rules on how the states and territories are funded by the Commonwealth.
Prime Minister Scott Morrison made the announcement on Friday after a meeting of the national cabinet, which has met once or twice a week through the coronavirus crisis.
"COAG is no more. It will be replaced by a completely new system and that new system is focused on the success that has been yielded by the operation of the national cabinet," Mr Morrison said, describing the new set-up as "congestion busting" and designed to "avoid endless meetings that do not result in action".
The announcement was greeted positively, with the Council of Australian Governments considered bureaucratic and unproductive, but concerns are already being raised about the legal status of the new cabinet and its secrecy and solidarity rules.
Mr Morrison said it would operate under cabinet rules, which means cabinet confidentiality, collective responsibility and cabinet solidarity.
It would meet fortnightly during the pandemic and then monthly, with the singular focus of creating jobs, he said.
A series of "ministerial cabinet subcommittees", drawn from the states, territories and commonwealth, would be set up to drive reform in seven subject areas - regional Australia, skills training, energy, housing, transport and infrastructure, population and migration, and health.
The committees would advise cabinet in the same way the national health committee of chief health officers has advised cabinet in the pandemic, and would also feed into the national group of treasurers, which meets as the Council on Federal Financial Relations. That group would consolidate and rationalise the many national partnership agreements under which Commonwealth funding is distributed to the states and would report to national cabinet.
To date, commonwealth-state funding agreements had been "belted out in portfolio ministerial councils, endlessly, round and round and round and ultimately in a half resolved sort of state they can trickle through for a stoush between the leaders", Mr Morrison said.
COAG had been dominated by "a lot of theatre, a lot of people in the room", which Mr Morrison said restricted "genuine reform discussion".
Mr Morrison said national cabinet had worked during the pandemic because it operated under rules of cabinet confidentiality and the new ministerial committees would work on the same basis.
"We've agreed on the new structure and we think that will ensure that Australians get better government, more focused government at a state and federal level," he said.
Sydney constitutional law professor Anne Twomey welcomed the move to abolish COAG, which she said had become mired in bureaucracy, bogged down in briefings and submissions, and was completely controlled by the commonwealth, which decided whether and when it would meet and what was on the agenda. The secretariat for the new national cabinet must be genuinely federal and not controlled only by the commonwealth, she said.
The national funding agreements were overdue for simplification, having proliferated and become "phenomenally wasteful in terms of bureaucratic time and energy". Kevin Rudd had tried to simplify them but had become distracted by the global financial crisis, and then "the bureaucracy struck back", she said.
But Professor Twomey said it was "very peculiar" to categorise the body as a national cabinet.
"Clearly it's not, and calling it a national cabinet is probably just an attempt to try and attract the secrecy rules that concern cabinet submissions," she said. "That's going to be problematic both under freedom of information laws and calls from upper houses in parliament for access to documents."
It also raised questions of accountability, given none of the ministers other than the prime minister were accountable to the federal parliament.
Constitutional lawyer George Williams also welcomed the move.
"What the pandemic has done is led the Commonwealth to rediscover the virtues of having a federation, and that good will and cooperation between the tiers of government can go a long way in solving pressing national problems - so it would have been disappointing to simply return to business as usual," he said.
But Professor Williams said applying the normal rules of cabinet confidentiality and solidarity would be difficult given the different political agendas. National cabinet's agreements would also be complicated by the need for state parliaments to also agree.
"National cabinet was a worthwhile invention but if we're looking at making some these changes permanent we need to think more deeply about the long-term implications and make sure it includes the normal rules of governance - transparency, serving the public good, accountability," he said.
Mr Morrison said task forces already set up on domestic violence and Indigenous affairs would continue.
ACT Chief Minister Andrew Barr welcomed the overhaul, saying more frequent meetings of Australian leaders would help generate momentum for the reform agenda.
But Mr Barr said leaders had to be cautious of not making rushed decisions under the new structure.
"Rushed decisions can sometimes not be good decisions. We do need to ensure that as we move into this new process there is still good decision making, still good consultation," he said.
- with Dan Jervis-Bardy