Constitutional Confusion And The Movement For Indigenous Recognition

Constitutional recognition of Australia’s Indigenous people is a conceptual, legal, and political mess. The release of the cross-party parliamentary report last week demonstrates this beyond a doubt.

It’s been nearly a decade since Kevin Rudd’s 2020 Summit, from which the modern move towards recognition stems.

Now, in 2015, there are multiple, contradictory proposals on the table. The purpose of recognition is, if anything, getting less clear. The whole cause is, almost certainly, looking more hopeless.

It’s true that political momentum appears to be building. But momentum for what? For what specific change?

The most obvious amendments to the constitution would be the elimination of two clauses that clearly reflect the values of a previous time.

The first is section 25. This section penalises states if they remove the vote from Indigenous people by reducing those states’ population numbers for House of Representatives seats. The concern is that this section implies the states might do such an abhorrent act. But the section is basically a dead letter, just sitting there reminding us of the past. There is near universal agreement that this section should go.

The second is section 51(xxvi). This allows the Commonwealth to make laws with respect to “The people of any race for whom it is deemed necessary to make special laws”. Now section 51(xxvi) is clearly illiberal, allowing Parliament to treat people differently according to their ethnicity or origins. The section is colloquially known as the “race power”. There is also near universal agreement that it should go.

But section 51(xxvi) also happens to be the power which the Government has used to get through policies seen as beneficial to Indigenous people. To get rid of this section might undermine the constitutional foundation of, say, native title.

So the proposal is to replace 51(xxvi) with something that allows Parliament to make laws for the Aboriginal and Torres Strait Island people – perhaps specifying those laws must be for their “advancement”.

In other words, the idea is to replace one race power with another race power.

The best one could say about the proposal is that it is cosmetic. A more honest observer would have to say the race power switch is disingenuous.

Removing discriminatory language from the constitution is one of the most fundamental elements of the recognition project. But it can’t be done without risking things like native title. If constitutional recognition progresses any further, watch its advocates dance around that basic conceptual problem.

But of course a desire to slightly modify the language of the race power isn’t what’s driving the Recognise movement.

Hence the other proposals that have been lumped under the Recognise banner. For instance, a prohibition on racial discrimination by state and federal governments. The possible contradiction with a new race power would be resolved by a caveat that laws could be imposed to help overcome disadvantage, remedy past discrimination, protect Aboriginal culture so forth.

No future Parliament is going to believe it is imposing laws on Indigenous people against their best interests. Thus, the upshot of such an amendment would be to handball to the High Court the responsibility not only of deciding if law is simply constitutional, but if it is good. Tony Abbott calls this a “one clause Bill of rights”, to which he is opposed.

There are other options. All have problems. Many Indigenous leaders reject a mention of Indigenous people in the preamble as mere symbolism. Anyway, John Howard’s preamble in 1999 – which would have mentioned Indigenous people – failed to get up. Noel Pearson wants an advisory Indigenous council written into the constitution itself. Pearson’s seems like an ambit claim.

What is the goal of the recognition movement? Its advocates are clear: they don’t want symbolic change, but constitutional change that would lead to material advancement. This was the firm conclusion of last week’s parliamentary report.

Yet that dismissal of symbolism sits uneasily with the claims that the constitution is our great national document which should reflect the principles of Australian society – an assertion that is, fundamentally, about its symbolic role.

Far too much hope for material well-being has been tied up on this referendum. It is not obvious that constitutional change is the low-hanging fruit of Indigenous advancement.

The whole debate is being conducted in the shadow of the 1967 referendum, which removed two discriminatory provisions from the Australian constitution. It was the most successful referendum in Australian history. But the debate which underpinned that referendum was characterised by overstatement and confusion.

In 1967, the Yes advocates pitched the referendum as offering Indigenous people citizenship, even though the actual proposals on the table did no such thing. The long confused legacy of 1967 is so great that, in their book on constitutional recognition, Megan Davis and George Williams write that to get a Yes vote in 2015 or 2016, advocates will first have to clarify in the public mind what was agreed to five decades ago.

There is much racial goodwill here. But racial goodwill does not rewrite constitutions.

The Case for No

With Mikayla Novak

Make that three times. One of the happy casualties of Kevin Rudd’s decision to go to an election one week before Julia Gillard’s preferred date of September 14 is the referendum to recognise local government in the Australian Constitution. Local government recognition was defeated at a referendum in 1974. It was defeated again in 1988. Now it has been abandoned in 2013.

Let’s hope this is the last time this terrible idea gets up.

Anthony Albanese, the Commonwealth Minister for Local Government, was eager to point out that the change to the constitution proposed was only 17 words. The referendum to recognise local government would have amended Section 96 to read:

96 Financial assistance to States and local government bodies.

During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State, or to any local government body formed by a law of a State, on such terms and conditions as the Parliament thinks fit.

Local governments and their peak lobbies said this was a minor, technical change. Albanese has described it as ‘modest’ and ‘sensible’. Julia Gillard said it simply ‘reflect[ed] modern reality’. The Lord Mayor of Sydney, Clover Moore said it ought to be ‘non-contentious’.

It was anything but. The change to Section 96 was one of the most significant, dangerous, and consequential constitutional amendments ever proposed. It would have completely unbalanced Australia’s system of government. It would have freed the Commonwealth from any spending constraint. It would have unleashed local government fiscal recklessness. And it would have eliminated the checks and balances embedded in a federal constitution.

The referendum may not be going ahead — thank goodness — but it was a brief window into one of the most deep-seated problems of Australia’s constitution, and a reminder of how the biggest power grabs are dressed up as minor housekeeping.

The uncertain place of local government

There is one small way the advocates of a local government referendum are right: councils are strange beasts: they’re half state government departments, half autonomous democratic governments in their own right.

The development of Australian local government by colonial governments was among the many institutional innovations enacted during the nineteenth century.

Town trusts were established throughout Western Australia in 1838 primarily for the management and funding of roads. This was followed shortly thereafter by the first elected municipal council in Australia, established in Adelaide in 1840, and similar bodies in Sydney and Melbourne two years later.

By the late nineteenth century local government bodies were widespread and, notwithstanding interstate variations, they were generally responsible for a myriad of functions and activities, such as roads, tramways and other public transport, water supply and sanitation, gas facilities and other local infrastructures.

In some jurisdictions, local governments during the colonial era were responsible for the provision of local schooling, care for orphans and the sick, cultural and recreation services including libraries and public gardens, and even the control of prostitution. Some of these functions have been maintained to this day, whilst others such as direct provision of infrastructure services have been allocated to the states or devolved to the private sector.

While the division of powers in a federated Australia were central to the discussions at the Constitutional Conventions of the 1890s, local governments were largely overlooked due to the understanding that local governments were, and remain to this day, the legal and administrative responsibility of individual states. There was little by way of direct financial relationships between the commonwealth and the states for most of the twentieth century, although tied roads grant funding to the states had an indirect effect on local road works, and councils had some involvement in the growing post war preoccupation with regional planning by commonwealth and state governments.

The size and scope of local government services significantly expanded during the 1970s, as the Whitlam government initiated a direct commonwealth local funding relationship which provided grants funding, bypassing the states, for programs including senior citizens’ centres, leisure facilities, urban transport and tourism.

The ratcheted federal funding to councils reflected Gough Whitlam’s own perception that ‘there are few aspects of our environment or our development, our culture or our welfare which can be adequately tackled without involving local government.’

And, he ought to have added, ‘without sidelining state governments’. Whitlam’s agenda was highly political: local government financial recognition was a vehicle for the traditional Labor Party hostility to the states. Canberra felt that the federal structure of government was a roadblock to its grand plans for bigger government and social reform.

Voters felt otherwise. When Whitlam put the question of local government recognition to a referendum in May 1974, the No case won. While the Fraser government abstained from some of the more interventionist aspects of Whitlam’s intrusion into local affairs, the general architecture of Whitlam era commonwealth funding arrangements to councils and shires remains to this day.

The constitution allows the Commonwealth to fund local government two separate ways. Section 51 gives the federal government power to make policy and spend money in thirty-two separate areas — such as the administration of the postal and telecommunications networks, immigration, banking, weights and measures. Section 51 was designed to neatly divide up the roles and responsibilities of government between the Commonwealth and the states. The Commonwealth can give whatever money it wants to whoever it likes if it is acting in one of the areas allocated to it by Section 51.

The other way is through Section 96, which allows the Commonwealth to pass money to local governments through state governments. Section 96 was added to the constitution at the last minute. It has no international precedent in other constitutions. And it has completely undermined the clean divisions of Section 51. Section 96 currently allows the federal government to pay state governments to do whatever the Commonwealth cannot, and allows them to impose tight terms and conditions on that funding.

This broad section is how the Commonwealth is now involved in education, health and housing. It is Section 96 that is to blame for the ‘blame game’ — the confusion of roles and responsibilities in Australian public policy.

In other words, Section 96 should be scrapped, not expanded. Adding local government to the mix would supercharge this terrible constitutional provision. The Commonwealth would be able to completely bypass the states. Unlike state governments, local governments have no stake in the division of roles in the constitution. They have no powers to protect. They’re also easier to bully: it would be much simpler for Canberra to manipulate and control 565 small councils than six well-funded states jealously protecting their sovereignty.

Local governments fantasise that Commonwealth money would be liberating. This is only half-true. Local governments would be financially empowered, but they would also be tools of Commonwealth policy.

There is a desperate hunger in Canberra for more control over every area of public policy. During his first term as prime minister, Kevin Rudd even said the Commonwealth should assume responsibility for urban planning — the quintessential local and state government role. Given the steady centralisation of power over the last hundred years, aided in no small part by Section 96, it is virtually a certainty that every local government policy will be eventually decided in Canberra, far from the local communities they effect. But the last thing we want is Commonwealth bureaucrats deciding local rubbish and recycling policies.

Unleashing local government recklessness

The current system has one distinct benefit: state supervision of local government has kept councils from soaking ratepayers.

Since the late 1970s the New South Wales state government has maintained a ‘rate pegging’ system, which sets the maximum percentage increase to general revenue, including municipal rates and some user charges, for councils.

Other states have also employed rate pegging in the past, such as Victoria and South Australia during the 1990s.

Several interrelated reasons have been put forward in support of pegging the growth rate in rates. These include the desire to constrain cost of living increases faced by rate paying households, and the prevention of fiscal
exploitation by local governments in setting rates which finance monopoly goods and services.

Efficiency arguments in favour of rate pegging could also be posed, in the sense that constraints on municipal rate increases may encourage councils to finance goods and services through user charges, ensuring that the costs of council outputs are more closely aligned with their underlying demands.

While NSW councils are permitted under rate pegging to formally seek rate increases above the statutory limit, the system has succeeded in constraining the growth in municipal rates revenue compared with most other states.

Since the introduction of the GST, municipal rates revenue in NSW have grown in nominal terms by an average of 4.3 per cent per annum, the lowest growth of all states and the NT and below the national average growth for rate revenue of 6.8 per cent per annum.

The NSW municipal rates regime also generally fares well against other states with regard to other indicators of tax burden. In 2011-12 councils and shires in NSW collected $473 in rates per head of population, the lowest of all jurisdictions except the Northern Territory. NSW rate collections, as a share of gross domestic product, stood at 0.8 per cent in the same year, which was higher than only Western Australia and the NT.

Local governments have long resented constraints imposed upon their abilities to raise additional revenue from municipal rates, with some councils arguing that it prevents them from meeting infrastructure requirements, and other additional service demands placed upon them, resulting from population growth.

Approval of the referendum proposal for financial recognition of local governments in the Australian Constitution would formally provide councils and shires with access to revenues forcibly acquired from federal taxpayers. Unprecedented access to the federal funding tap would diminish the effectiveness of state rate pegging initiatives, as the relative share of commonwealth grants in the total local government revenue mix inevitably increases over time.

Unleashing the Commonwealth

The local government referendum is one part of a much broader attempt by the Commonwealth government to free itself from constitutional checks and balances.

One obscure piece of legislation passed by the parliament last year was the Financial Framework Legislation Amendment (No.3) Bill. This bland sounding law was in fact a complete abrogation of the parliament’s duties to scrutinise government spending.

The bill purports to gives the Commonwealth power to spend on more than four hundred separate areas — everything from United Nations contributions to subsidising political party apparatus — without having to ask the parliament for permission ever again.

It’s no exaggeration to say that revolutions have been fought over the question of whether parliament can scrutinise the executive’s spending. But this Australian parliament — with complete, bipartisan support, mind you — has willingly and happily tossed away that responsibility.

The Australian Constitution serves as the enduring ‘rule book’ framing the nature and scope of collective action to be undertaken by the federal government. In doing this it aspires to provide people with a sufficient degree of certainty to go about their daily lives, without undue fear of arbitrary fiscal and regulatory exploitation by politicians and bureaucrats based in Canberra.

The Commonwealth government is also more distant from the locus of political decision making in local and regional areas, and is thus more prone to significant errors as demonstrated by numerous policy failures over the past few years.

It is for these reasons that proposals to shift the constitutional goalposts in favour of greater control and political prestige for Canberra have rightly been resisted in the past. But the Financial Framework Bill has already allowed the executive to bypass parliamentary scrutiny on its spending.

Local government recognition is no small matter. It would have completely, irreversibly, and destructively rewritten Australia’s constitutional settlement. Will we be asked to revisit it a fourth time? Unless the federal government stops wanting to accumulate power and unbalance the federation, almost definitely.

Free-Rein Proposal By Canberra Should Be Hobbled Before The Pass

If the Gillard government has its way, we’ll have an extra question to answer at the federal election in September: do we want to amend the constitution to recognise local government?

Sure, this referendum sounds harmless, almost touching. Local government likes to cultivate an image of community and grassroots civic engagement. Why not acknowledge it exists in our great national charter?

Well, lots of reasons.

It’s a bit of a misnomer to call local governments ”government” at all. Administratively, they are more like state government departments.

But unlike, say, the Victorian Department of Education, they are virtually unaccountable, entirely unscrutinised, and deeply deluded about their own influence and importance. Council benches are filled with a mixture of naive do-gooders and cynical political apprentices looking for a safe state or federal seat.

No wonder a quarter of us don’t vote in local government elections. Why should we give these clowns any more legitimacy or esteem?

Don’t listen to what Canberra says. The local government referendum has nothing to do with local communities or anything like that. It’s a power play – part of a long-running campaign by the Commonwealth to free its spending decisions from parliamentary scrutiny and undermine the states.

To understand the significance of the September referendum, we have to go back to an obscure bill passed by Parliament last June: the Financial Framework Legislation Amendment Bill (No 3) 2012. This bill received almost no press attention. It was supported by all sides of Parliament. The Coalition half-heartedly put up an amendment, but once that was rejected, it backed the bill anyway. The bill was made law in three hours.

Yet it was one of the most undemocratic and scandalous pieces of legislation passed in recent years. Forget the carbon tax. This is what Australia should be most angry about.

The bill authorises the government to spend money on 415 areas of public policy without having to ask Parliament for permission ever again.
It was quickly written in the wake of the successful High Court challenge to the school chaplains program. The court found that if the government wanted to spend money on a program, it was required to pass a valid law through Parliament – which it had not done in the case of school chaplains. This is not a trivial requirement. Parliamentary scrutiny is the essence of representative democracy.

The government’s solution was smart-alecky, brazen and obnoxious. The Financial Framework Legislation Amendment simply authorised spending on everything at one fell swoop – everything from United Nations contributions, to ”diversity and social cohesion” grants, to industry subsidies. Local government is in there, too. Now the government can do anything it wants. The bill even says the government can spend what it likes on ”political party secretariat training”.

The constitutional scholar Anne Twomey has described this as an ”abject surrender” by Parliament to the executive.

The proposed local government referendum builds on the 2012 bill. The Commonwealth wants free rein to fund councils directly, bypassing state governments. True, it wouldn’t be a new power. The Commonwealth has been giving money to local government for a while. Some of the most wasteful parts of Kevin Rudd’s stimulus program went through councils.

But the government thinks such spending might be unconstitutional, given the school chaplains decision and a similar 2009 High Court case, Pape v Commissioner of Taxation.

Let’s dwell on that.

The Commonwealth government believes it is breaking the law. Yet instead of ceasing its illegal practice (as citizens would be required) it wants us to rewrite the constitution instead. And all this four years after the Pape case raised the problem in the first place.

What if the referendum fails? Will it stop handing cash to local government? Of course not.

No, the real story here is how the Commonwealth is trying to erase all parliamentary, legal, and constitutional impediments that limit its spending. The referendum is just a small skirmish in a larger war.

Local government recognition has always been a tool to neuter the states. The last two referendums on this question were under Labor.

Both failed. Gough Whitlam was clear about his real goal during the 1974 attempt. States had ”little relevance to today’s needs”. Funding local government directly would undermine the power and authority of those states.

The Coalition might be expected to oppose Gillard’s referendum. Federalism is a bedrock principle of Australian liberalism. But Tony Abbott is no fan of the states, either. He supports a yes vote.

There’s a more banal reason for the referendum. Julia Gillard promised one as part of her deal with the independents. Yet that was a political decision made in the heat of 2010. It’s one promise she should break.

Happily, most referendums fail. Only eight of the 44 since federation have been successful. This one deserves to join the losers.