The effectiveness of the Council of Australian Governments will be put to the test over this year as it tries to drive reforms to make the national economy more seamless.
Failure to fulfil the reforms could result in millions of wasted dollars, hamper potential economic growth and see the states and territories miss out on financial rewards for completing the agreement.
The COAG Reform Council's third annual report on the seamless economy agenda, released today, says 12 out of the 49 reforms are in danger of not being completed by December as agreed.
"The ability to complete this agreement is a pretty good test whether, underneath the top level of the premiers and prime minister, does the federal system have the capacity to drive things aggressively and effectively and completely," council chairman Paul McClintock told journalists in Canberra.
"It's not just the 12 reforms which are important in themselves, it is also a test as to whether the whole structure is working effectively in a fairly difficult political environment."
When the process began in 2008 to get outstanding reforms completed over four years, Labor governed at all federal, state and territory levels.
Since then strains have emerged within COAG as the coalition has taken power in NSW, Victoria and Western Australia.
Amongst the 12 reforms at risk is the planned harmonisation of the occupational health and safety laws across the nation, which would save businesses $350 million a year, according to the Productivity Commission.
Others include a national trade licensing system, a consistent approach to personal criminal liability of company directors, and the regulation of the legal profession.
"These reforms impact businesses and individuals right across the country. They are an important part of boosting our productivity and labour mobility," Mr McClintock said.
An analysis by the Productivity Commission last year on just 17 of the reforms found they would save the economy some $4 billion in costs over the long term, and lift economic growth by around 1.5 per cent.
The states and territories are also in line to share a $200 million payment reward in the 2011/12 financial year, depending how the commonwealth feels they are progressing with the reform process.
Another $250 million is up for grabs in 2012/13.
Mr McClintock said the payments were at the discretion of the prime minister and federal cabinet, and the COAG Reform Council made no recommendation.
"Quite clearly ... if all the reforms are not achieved ... then the commonwealth is in its rights to make the judgment call about the level of reward payment," he said.
Australian Industry Group chief executive Heather Ridout said while the report highlighted important areas of progress she was concerned that some key areas were falling behind.
"It is incongruous that, at a time when lifting productivity is assuming so much importance and attracting so much lip service, the delivery of these reforms should be at risk," Mrs Ridout said in a statement.
"Addressing the at-risk areas should be a priority for all governments."
