Tag: federalism

Every government dreams of reforming the federation, but dreams usually end in disappointment. Malcolm Turnbull should know this.

Consider his predecessor. Tony Abbott always had a love-hate relationship with federalism. His attitude to the states in Battlelines ranges from ambivalent to hostile. As Howard government health minister he helped orchestrate the “local” takeover of Devonport’s Mersey Hospital from the Tasmanian state government – a takeover underwritten by the Commonwealth government, of course.

But in his 2013 budget reply speech as opposition leader, Abbott suddenly declared that under a Coalition government the states would be “sovereign in their own sphere”.

It was an important moment. That phrase had been used by the Australian founders. During the 1897 federation conference Edmund Barton said the goal was “to create a system of government under which, as to over all the powers they retain, the States will be supreme and sovereign in their own sphere.”

The technical structure of our constitution says that everything not expressly given to the Commonwealth government is to be left to the states. But to say that the states are sovereign is to go further than legalities – it is to assert that the states have fields of control which cannot legitimately be usurped by the Commonwealth.

Of course, in the 21st century the states are anything but sovereign. There is no area of state constitutional responsibility that does not have the federal government slobbering all over it. These days health, education and infrastructure are all, in practice, joint Commonwealth-state endeavours. The Commonwealth dominates the collection of taxation and distributes funds for the states to spend. But funding tends to come with conditions, and the Commonwealth uses the leverage it gains from its revenue to pursue its own goals in the areas of health and education.

It is hard to imagine a system of governance worse for accountability, for transparency, even for democracy than to have one level of government raise funds and the other level spend it.

Abbott commissioned a taskforce in his own department to produce a white paper into federal reform. The taskforce produced a discussion paper and four issues papers but then quietly disappeared – the promised green paper (to be “released in the first half of 2015”) and white paper (“by the end of 2015”) never materialised.

One explanation for the quiet death of Abbott’s federation agenda was the general drift that characterised his last year in office. But part of it was almost certainly because the taskforce had thrown up some very radical solutions to the problems of Australian federalism – like removing the Commonwealth from schooling altogether, or the Commonwealth directly spending more of the money that it raises, or encouraging the states to raise more money themselves – that were a bit too bold for the Government’s taste.

There are fundamental structural problems with Australia’s federal system. Almost any solution is radical. Turnbull is not the first prime minister to propose returning income tax powers to the states, and he’s not the first to abandon it on political grounds.

Political strategists often point out that voters don’t care about which level of government is responsible for what policy area. If a road has a pothole, they just want it fixed. They don’t want to be told by a politician that it is a state or local responsibility. Newbies to federal politics quickly find themselves discussing local traffic lights with constituents rather than foreign policy.

Yes, vertical fiscal imbalance – the term which describes the disjuncture between the Commonwealth’s taxing and the state government’s spending – is an esoteric problem. But then again, the federation is an esoteric topic. Constitutional limitations on government are esoteric. Just because a problem is esoteric does not mean it is unimportant.

Unfortunately no government has successfully made these esoteric issues relevant – outlined the relationship between fixing the federation and practical policy consequences. “Stop the blame game” is a great catchphrase but it’s not quite great enough to justify major reform.

So Turnbull’s failure to win the state income tax argument against a group of self-interested premiers last week should not have been a surprise.

If, as some commentators have argued, Turnbull is playing a long game – by showing that the state governments would rather complain about being underfunded than to take financial responsibility for their own public services – then more power to him. The question is whether the goal of that long game is simply to justify reducing the amount the Commonwealth gives to the states for health and education in the 2016 budget, or to lay the foundation for a deeper reform of the federation itself.

Turnbull has a lawyer’s understanding of how Australia’s federation today looks nothing like the constitution originally prescribed, and he has a politician’s understanding of how to deal with the states. But the federation question is about more than just politics and law. It’s about how we conceive the Australian nation. It’s about whether power should be divided between states and the Commonwealth or whether we should accept the centralisation of power as inevitable. Are states sovereign? Or are they just subservient?

“Most persons think that a state in order to be happy ought to be large,” wrote Aristotle in his Politics, “but even if they are right, they have no idea what is a large and what is a small state.”

And 23 centuries later, not much has changed.

A group of Queensland MPs have renewed a longstanding call to split Queensland in two. They believe they can force a referendum on the issue. The Minister for Northern Australia, Matt Canavan, also supports the new state proposal.

But Annastacia Palaszczuk believes “Queensland should be bigger, not smaller”. She wants Queensland to take the Tweed Coast from New South Wales.

There are other proposals. Warren Entsch wants to split the top half of the country in two, creating a northern mega state.

Yes, redrawing the map of Australia is a classic holiday-season news story. It’s both fun and slightly frivolous.

But the question of the ideal size of a political jurisdiction pervades debates about everything from council amalgamations to whether Britain should leave the European Union – a political and economic alliance that has developed state-like characteristics.

The great Greek philosophers believed that the ideal size of a political jurisdiction was a small city. Aristotle put it this way. The city should be large enough to be self-sufficient. But a city with too many people is ungovernable. A city should be small enough so that the citizens know each other well enough to distribute offices according to merit. Plato decided that optimal city size had 5040 families.

Neither economic self-sufficiency nor knowing office-bearers personally are imagined to be important any more. But Aristotle did underline the basic tension in deciding whether to make states larger or smaller: between economic desires and democratic ones.

On the one hand, economic considerations suggest that larger states are better. Larger states can exploit economies of scale and deliver more services. It is as much work to write a school curriculum for two schools as 2000 schools. This is the intuition behind the steady centralisation of policy towards the federal government – the idea that it is more efficient to impose the same policy on everyone, rather than have regional governments develop their own approaches from scratch.

But on the other hand, economies of scale aren’t everything. Democracy – that is, genuine democratic engagement, not just attending a polling booth every few years – seems to thrive better in smaller jurisdictions. The idea that the people rule is more believable when it is possible to imagine ourselves as one of those rulers – something which is less likely in a giant unitary nation than a small community.

There is, simply put, a trade-off between the economic benefits of large size and the democratic benefits of small size.

That trade-off helps us understand why the Queensland government – any Queensland government – will fight a split. More economic power means more wealth that can be delivered to the government’s supporters, and the political class rarely welcomes any more democratic participation.

Nor is the federal government likely to welcome any new states. It is much easier to negotiate with one Queensland government rather than two. More states reduce the concentration of political power. Those who hold political power dislike that idea.

Back in 2009 Geoffrey Blainey argued that it was “absurd” not to establish a new state in northern Queensland because when Queensland was formed no one knew about the mineral resources in its north.

Yet as the Danish political scientists Martin Bækgaard, Søren Serritzlew, and Kim M. Sønderskov point out, the optimal jurisdiction size for any political community depends on what we want those communities to do. Aristotelian self-sufficiency is unnecessary in a world of international trade. But the high cost of modern militaries mean we need huge nations to pay for a single F-35 Joint Strike Fighter.

Bækgaard, Serritzlew and Sønderskov argue that for jurisdictions with minimal functions and responsibilities, smaller is better. For Australian local governments the optimal size might be as little as 5,000 people. Rather than amalgamating councils we should be splitting them up.

Blainey is right that it has been a long time since the map of Australia was first drawn. But the key change since is not the discovery of resources, but the long centralisation of power in the Commonwealth government. Policy areas that the constitution leaves to the states – like education – are increasingly being controlled by Canberra. This is as good a reason as any to rethink the number of states.

As state governments do less and less, there ought to be more and more of those governments. North Queensland should be just the start.

Possibly the most unexpected part of the 2014-15 federal budget is what it means for Australian federalism.

Tony Abbott is the last person you would expect to be withdrawing the Commonwealth from areas of state responsibility.

Under the Australian constitution responsibility for the health and education systems rest with the states.

But over the last century the federal government has steadily, slowly, inexorably spread its tentacles throughout these policy areas.

In his 2009 book Battlelines, Abbott enthusiastically defended this federal takeover of state responsibilities, arguing that the constitution’s divisions of power were anachronistic and inefficient.

In his view at the time, any withdrawal of Commonwealth involvement or spending in health and education “would rightly be seen as a cop-out”.

A lot has apparently changed since then. Now, we read in Abbott’s first budget:

State Governments have primary responsibility for running and funding public hospitals and schools. The extent of existing Commonwealth funding to public hospitals and schools blurs these accountabilities and is unaffordable.

Thus, more than $80 billion in Commonwealth commitments to the state governments for schools and hospitals are being abandoned.

Of course, this is in part sheer opportunism. It helps the budget bottom line for health and education costs to be more borne by the states.

The policy shift would be more coherent if it came after the release of the forthcoming white paper into federalism.

Nevertheless, those caveats aside, the budget represents a new stage in the relationship between the Commonwealth and the states, whose responsibility the national government has usurped.

Kevin Rudd once spoke of the “deep structure, folklore and mysticism of Commonwealth-state relations”. Central to that mysticism has been one article of faith: that with Commonwealth money comes Commonwealth power.

Hence the complex web of grants and regulatory agencies that govern Commonwealth-state relations and use money as a tool for policy control.

Now that the money is being pared back, the states should take the opportunity to reject Canberra diktats as well.

For instance – wouldn’t this be a good opportunity to abandon the Gillard government’s national curriculum?

One of the most common claims in Australian politics is that federalism is dysfunctional. Indeed, that was one of the themes of Battlelines: a century of Commonwealth policy imperialism has left us with overlapping responsibilities, unclear areas of accountability, and widespread voter confusion about what level of government does what.

But in truth the system is only as dysfunctional as any other political system that requires constant negotiation and compromises.

Where the true dysfunction lies is in the politics of federalism, not the structure of federalism itself.

Federalism is constantly the subject of reformist impulse, constantly the subject of complaint, and in a constant state of mutability. Collectively, Australian politicians do not have a clear idea of what they want the federation to look like.

This is not a run-of-the-mill political disagreement. It’s something more fundamental to our political class. They don’t quite know how to handle the fact that political power is divided between two levels of government.

Australian federalism is confused and unstable because the political class is confused and uncertain about federalism.

The easiest political position to hold has always been centralisation – clear away all that confusion by handing everything to Canberra.

John Howard was an unashamed centraliser. Particularly during the last years of his government, Howard made it clear he had no truck with “states’ rights”.

But federalism was once a core Liberal Party belief. Robert Menzies wrote in his book Central Power in the Australian Commonwealth that “in the division of power, in the demarcation of powers between a Central Government and the State governments … resides one of the true protections of individual freedom”.

The end result of Howard’s centralism was WorkChoices – a federal takeover of industrial relations.

Rudd proposed “collaborative federalism”. This model was supposed to forge a new relationship between Commonwealth and states that was based less in hostility and more in harmony.

But Rudd’s kumbaya utopianism was paired with by his technocratic desire for Canberra control. One proposal to end the “blame game” was an outright federal takeover of health – a takeover brought about, if necessary, by a referendum.

In 2009 Rudd even suggested the Commonwealth take over urban planning. It is hard to imagine a less “national” policy area than city design.

Now Abbott – the passionate centraliser, student of Howard – is trying to strengthen the traditional division of powers. No wonder Australian voters are confused about which level of government is responsible for what.

In a crisis meeting in Sydney over the weekend, the state premiers said they hoped to enlist federal senators to their side for the budget contest.

Technically, you see, senators are supposed to represent the states. That’s how our political system was designed.

But in practice they do no such thing. The Senate is just a slightly more patrician group of the usual party politicians. The idea that senators would go against their party interest in favour of the interests of the states they represent is laughable.

The premiers’ suggestion underlines just how disorientated they are by Abbott’s federalist revival.

As, indeed, all Australian politicians are about the purpose of Australia’s federal system.

The critics of political theatre suggest Anna Bligh has shown successful leadership during the Queensland floods and Cyclone Yasi.

Julia Gillard’s notices have been somewhat less positive. Trying to emote in front of TV cameras, she’s looked wooden. Like Samuel L Jackson in the Star Wars prequels, Gillard is talented but the script gives her nothing work with.

That’s a show of leadership succeeding at the state level, and failing at the federal level.

So aren’t you glad we still have states?

The last few years have seen a chorus of voices claiming the very existence of state governments – therefore the entire basis of Australia’s federal system – is anachronistic, a relic of the colonial era, and the biggest impediment to national reform.

Tony Abbott and Bob Carr are openly dismissive of state government powers. John Howard never saw a centralisation he didn’t like. Neither did Kevin Rudd.

Our opinion and letters columns are littered with complaints about wasteful duplication and how just darn unnecessary those states are.

But in the wake of this year’s natural disasters, perhaps federalism could find a few more friends.

Putting aside the performances of Gillard and Bligh, it would have unthinkable for a federal leader to take responsibility for this month’s disaster efforts: floods in Queensland, Victoria, New South Wales, South Australia, and Tasmania, and floods and bushfires in Western Australia have all had their own characteristics. Affected states have each had separate and specific needs. They require their local leadership and expertise.

Busy with the floods and cyclone in Queensland, a lone prime minister spread too thin would have had to virtually ignore the devastating fires in Western Australia.

The idea of federalism suggests the closer governments are to those they govern the more responsive and representative they will be. State governments can respond better than Canberra. The start of 2011 has surely demonstrated the validity of that claim.

It’s not even an issue of competence. Politically, Anna Bligh’s government has been on the nose all through 2010. But her “bloody awful tough year” – to use the premier’s words in December – was all but forgotten as the waters rose and the storm approached.

And it’s not to say we won’t find Bligh government failures before and during the floods and cyclone. We haven’t heard the last question about the management of the Wivenhoe Dam, or the Queensland Government’s decision to forego insurance.

But decades – hell, a century – of rolling federal government fiascos should leave us in no illusions Canberra could do any better.

Much has been made of the comparison between the natural disasters of 1974 and this year. But bookended by the Brisbane floods in January, and Cyclone Tracy that Christmas, 1974 was also one of the defining moments for the relationship between the Commonwealth government and its state counterparts.

The two disasters came smack bang in the middle of Gough Whitlam’s push to steam roll his agenda over the states. (Malcolm Fraser would later describe a Liberal approach as “new federalism”. Gough’s plans could perhaps be described as “no federalism”.)

No surprise the events of 1974 led to more restructuring in favour of the federal government. A Natural Disasters Organisation was set up after the Brisbane flood. Cyclone Tracy confirmed the Commonwealth’s pre-eminent position. As the director of operations and plans in the Natural Disasters Organisation recalled, it was these twin disasters which gave the “impetus to the development of legislation and new arrangements for states and territories”.

Unsurprisingly, the reconstruction of Darwin (the Northern Territory was already under Commonwealth administration) was plagued by delay and indecision. Budgets blew out. Accusations of bureaucratic empire-building were thrown around. The Darwin Reconstruction Commission fantasised about building a “Canberra of the North”.

Where state powers were eroded after 1974, perhaps the aftermath of January 2011 will bring us, slightly, back the other way.

Gillard’s uninspiring attempt at leadership might give some small reason to hope for the future of federalism.

After all, Canberra’s failures are federalism’s last remaining defence.

The Prime Minister coincidentally suggested over the weekend she would be pulling back on Kevin Rudd’s grandiose health reforms; reforms which were to place Canberra squarely in the centre of our health system.

Queensland – poor Queensland – which had embraced Rudd’s reforms with open arms, will likely now have to keep responsibility for their own hospital system, just like all the other states.

The parameters of this cut-back health reform will be debated at COAG next Monday.

But there’s no doubt Gillard is looking to take health reform off her prime ministerial plate. Rudd’s plans to have the Commonwealth assume the vast bulk of responsibility for health and hospitals are being abandoned.

Federalism is the structure of government which the designers of Australia’s constitution intended. That structure has been battered down for a century.

But right now our Commonwealth Government is uninspiring, unloved and, completely unable to pursue its own policy goals. Federalism may have some life in it yet.

The Force from the North, Bob Katter, doesn’t do anything by halves.

His independent compatriot Rob Oakeshott has spent the last week pushing out ideas about parliamentary reform, a new politics of consensus, and Team of Rivals-style cabinet government.

Katter’s contribution has been a little more out of the box. On Thursday he proposed a wholesale redrawing of Australia’s state boundaries.

The plan is as follows:

Queensland gets neatly split in two, from about Rockhampton. South Queensland gets everything from Byron Bay to Bundaberg. North Queensland gets the rest, including, of course, Katter’s own electorate of Kennedy.

The Northern Territory loses a fair chunk of its south to an engorged South Australia, but its western border gets pushed out all the way to the ocean, taking the Kimberley and Broome from Western Australia. The new state – it’d be a state – would be renamed North-Western Australia, leaving Australia with an embarrassingly unimaginative bunch of state names.

Katter reckons new states would allow the country to better exploit the resources of the north, to become a food bowl, and accommodate 100,000 extra people.

Perhaps I’m taking Katter’s plan more seriously than anybody should. But you know what? It’s not a bad idea.

In 2010, it’s extremely refreshing to see a politician stand up for the very existence of states. From all sides of politics we’re far more likely to hear states are anachronistic relics of the 19th century – frustrating barriers to good policy. Not everybody goes so as far as arguing states should be eliminated entirely, but most are eager for the federal government to intrude further and further into state areas of responsibility.

One of Katter’s arguments for his plan is more important than it first seems. “I don’t know of anywhere else in the world where people are governed by a government thousands of kilometres away,” he told the Northern Territory News.

Indeed, one of the key ideas behind a federal system is that the nearer a government is to the people it governs, the more likely it will govern in their interests. The needs and desires of citizens in Victoria and the Northern Territory sharply diverge. Katter is arguing the needs of those in Coolangatta and those in Mount Isa, nearly 2,000 kilometres away, can be just as different. There is little reason to doubt it.

So when Katter talks about living in a “North Queensland paradigm” instead of an “Australia paradigm”, it actually makes a bit of sense. Many in his electorate no doubt agree; Katter’s two candidate preferred result was a massive 69 per cent.

Katter’s antipathy towards free trade and the economic reform of the last few decades has become very well-known over the last week.

Not only can states tailor their policies to the needs of their electorate, they act as policy incubators. Policies can be tested in an individual state before being adopted elsewhere. If policies don’t work, well, at least the damage is limited.

So more states, more experimentation.

If Katter wants North Queensland to get back into the state intervention game, then that’s North Queensland’s prerogative.

Across the border, the expanded and empowered Northern Territory could be a low tax, low regulation zone. We’ll see which state does best.

Reconfiguring the federation would be complicated, sure.

But we have a habit of believing our existing political arrangements are fixed and therefore eternal. The Australian federation is only just over a century old. And while our constitution has barely changed, the Commonwealth is doing things that would have astonished its authors.

Western Australian secessionism keeps raising its head, and will likely get louder as the rest of the country tries to expropriate the gains from mining in that state.

The boundaries of Australia are not written in stone. Nor should they be. Giving Bob Katter a pen to redraw the borders is radical, but not revolutionary.

Rob Oakeshott’s proposal for “consensus” government has been given serious attention, even though the corollary to his idea – having no opposition – is patently absurd. Well, maybe it’s not a bad idea if you’re engaged in total war against the Hun and the Empire of Japan, but it hardly seems appropriate in 2010.

At the same time Oakeshott is calling for consensus, he’s calling for the adoption of ideas from the Henry Tax Review and the Garnaut Climate Change Review. In other words, the most divisive reform proposals in the last few years.

Bob Katter’s plan for new states has the opposite problem. His plan seems absurd upon first glance – the NT News titled their article about his plan as “‘Cut snake’ Katter eyes Top End slice”.

But it makes a lot more sense than some of the other proposals being canvassed as we wait for a government to form.