States challenged on indigenous health

Indigenous Affairs Minister Jenny Macklin has backed a plan that would strip states and territories of federal funds.

The cuts would be made if they did not meet targets for Aboriginal children attending and completing school and failed to meet health targets, The Australian newspaper says.

Remote Indigenous Services Coordinator-General Brian Gleeson has called on Prime Minister Julia Gillard to take money away from states underachieving in indigenous education and health, and boost payments to those improving results and retention rates.

Presenting his second six-monthly report, he has urged the Gillard government to offer incentive payments to states that improve education and health outcomes for Aboriginal people.

Ms Macklin has already started this system with remote indigenous housing, where states have been punished for not delivering houses on time. Responding to slow progress, Ms Macklin changed the rules so states would compete with each other for the funding, to create an incentive to deliver on time and on budget.

Ms Macklin has told The Australian she will talk to her colleagues about doing the same in other crucial policy areas to extract better results.

"I'll certainly be discussing the Coordinator-General's report with my ministerial colleagues and I'll also discuss with them how useful this approach has been in remote indigenous housing.