“Last night and this morning I spoke with the Premiers and Chief Ministers and have indicated to them that I’d like to convene a meeting of the Council of Australian Governments on Thursday 20th December,” the Prime Minister said last Monday.

“The reason I have done this just before Christmas is so that we can get cracking, start work, sleeves rolled up on a very big agenda for the Commonwealth and States and Territories for 2008. What I’m signalling firmly, strongly today is it’s time for the buck-passing to end and it’s time for the real work, with sleeves rolled up, to begin.”

That’s maybe an unfortunate metaphor to use, as the blame game is all about bucks – funding flowing between Canberra and the states.

Vertical fiscal balance isn’t the catchiest phrase, but this is what COAG should be all about.

The political reporters missed it, but one of the clueyer economics correspondents, The Age’s Tim Colebatch pointed out how much of the federal election campaign was fought over state issues – schools, hospitals and roads.

Federalism was largely ignored by both sides of politics during the campaign, despite talk of the Commonwealth taking over schools or hospitals.

That’s something should worry voters. Would you like the people who locked up Cornelia Rau supervising your surgery?

States have been robbed by Canberra of the tax base that would enable them to meet the huge growth in school participation, the ageing of the population that pushes up health care costs, the demand for transport and water and other infrastructure.

The federal government should not try to take over services. Instead, it should fix these revenue issues. Financial arrangements need to be structured in a way that guarantees schools and hospitals and other services are properly funded and run by jurisdictions accountable to the communities that use them: state and local government.

Kevin Rudd must know that the Commonwealth and the states have differing interests.

Take education. Since he became Labor leader Rudd has made much of skills shortages. Just days after his election he ordered all his MPs to visit a public and private school.

The public schools belong to and are run by the state governments. The state Labor governments. The local State Labor MPs might well want to tag along. Electoral self-preservation should signal their very visible attendance.

Schools lack technical classrooms and we have a skills shortage thanks to the efforts of Labor state governments and left leaning state education bureaucrats. They removed facilities in the seventies and eighties to lift participation rates and advance “equality of outcome”.

No one left to blame? Hardly. Who fixes this? Canberra or the states?

The blame game will exist as long as there is someone else around to point the finger at. It will exist as long as responsibilities are shared. It will exist until vertical fiscal balance is tackled.