Australian Bureau of Statistics
1301.0 - Yearbook Chapter, 2008
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 07/02/2008
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FEATURE ARTICLE: AUSTRALIAN FEDERAL SYSTEM
each state government having the capacity to provide the same standard of services, presuming each:
A study of Australian, German, Canadian, Swiss and USA federations has shown Australia to be the only nation that attempts to deal with vertical fiscal imbalance through such a means. By contrast, the USA makes no effort to effect horizontal fiscal equalisation. Here, again, s. 96 is the constitutional instrument used by the Commonwealth.
As well as 'general purpose' grants, s. 96 grants can also be made to states 'on such terms and conditions as the Parliament thinks fit'. The first of what came to be called 'specific purpose payments' were made in 1923, when the Commonwealth Parliament passed legislation granting the states money that could only be used on the development of main roads. Sensing the danger of accepting grants for a purpose chosen by the Commonwealth, the states supported Victoria in a High Court challenge, only to lose their bid to have the legislation declared invalid.
For many years specific purpose payments were a relatively small proportion of s. 96 money granted the states, but since the deliberate increase in their use by the Whitlam Labor Government (1972-75), successive Commonwealth governments have maintained a high proportion of such grants. Today, four out of every ten dollars paid to the states have conditions attached, in a wide range of policy areas, including hospitals, schools, roads, housing and natural heritage, none of which is included in the powers granted the Commonwealth. Taking one state as an illustration, specific purpose payments to Tasmania in 2004-05 included money for such disparate purposes as the Gun Buyback Scheme, Indigenous education, essential vaccines, the Skilling Farmers for the Future scheme, crisis accommodation assistance, and housing assistance for Indigenous people. Some specific purpose payments are provided with few conditions imposed, but many of the grants are subject to detailed instructions from the Commonwealth as to exactly how the money should be used.
Were it not for the existence of s. 96 it is difficult to imagine that the Commonwealth could have gained the level of financial and governmental dominance it has achieved. As Menzies noted, s. 96 'has become a major, and flexible, instrument for enlarging the boundaries of Commonwealth action; or, to use realistic terms, Commonwealth power'. Tony Abbott has described the states as 'institutionalised beggars'. If that is the case, it has largely been the actions of Commonwealth governments since Federation, as well as High Court judgements, that has made them so.
HIGH COURT OF AUSTRALIA
The net impact of the High Court's role in interpreting the power relationship between Commonwealth and states has been to facilitate Commonwealth encroachment on state areas of responsibility.
The basis of a federal system is that governmental power is divided between different levels of government. What happens, though, when one level of government appears to be encroaching upon the powers of another? At such times, constitutional courts are likely to be called in to adjudicate. The High Court's first years saw an effort by a majority of the Court to protect the 'balance' between Commonwealth and state governmental power the Founders believed they were setting in place. For a time the Court established what has been called 'a doctrine of mutual non-interference between Commonwealth and states'. However, some High Court judges held views which emphasised Commonwealth powers and Commonwealth supremacy.
By 1920, the High Court membership in fact had altered to the point where such a view could prevail. In the Engineers case of 1920 the Court expressed the view that the key question in matters relating to the extent of government powers was just how far Commonwealth power extended. The impact of any judgment on a so-called 'balance' of Commonwealth and state powers was irrelevant. The long-term effect of this interpretative approach has been to produce 'a centralisation of constitutional power' in the hands of the Commonwealth Parliament. This centralisation has occurred in relation to many areas of governmental responsibility. For example, since the Concrete Pipes case (1971) the Commonwealth has been able to play a more hands-on role in the area of corporate activity, while the Ha case (1997) was one of a long line of cases that have steadily closed off the states' options in regard to establishing taxes designed to give them significant revenue sources of their own.
The 2006 WorkChoices judgment, which endorsed a broad interpretation or application of the corporations power, is the most recent of the cases that have impacted upon the federal balance, leaving the states 'more vulnerable to federal intervention'. The earlier comment in this paper about perspective would suggest that it is only a matter of time before a Commonwealth government - whether Coalition or Labor - makes use of the judgment to its own advantage.
SOME GOVERNMENTS HAVE PUSHED HARDER THAN OTHERS
All Commonwealth governments have tended to regard their own interests as paramount when interacting with state governments. Some, however, have made a more deliberate push to expand their powers at the expense of the states than others, with two governments, one Labor and the other Liberal-National, notable for their efforts to strengthen the place of the Commonwealth.
The Whitlam Government
Gough Whitlam had no love for what he called the 'archaic' Australian Constitution, and 15 years before becoming Prime Minister he was lamenting the 'very serious obstacles our Constitution places in the way of efficient and responsible government'. He claimed it was 'generally recognised' that national governments should be responsible for the state of a nation's economy, yet in Australia, a country effectively now a single unit due to improvements in communications, the national government could not properly assume its proper economic responsibilities. The solution was obvious:
There are few functions which the state Parliaments now perform which would not be better performed by the Australian Parliament or by regional councils. The states are too large to deal with local matters and too small and weak to deal with national ones.
The Whitlam Government was only briefly in power, but its impact on the federal system was substantial and a matter of political controversy. It took over some state functions such as railways, it threatened state power by its move to give funds to local government, it moved into unknown territory by its establishment of a department concerned with urban and rural development and, as noted earlier, it put pressure on state policy-making through a deliberate increase in specific purpose payments. In 1972-73, specific purpose payments of $931.5 million represented 25.8% of total Commonwealth payments to the states; in 1975-76, specific purpose payments of $4.15 billion (b) represented 48.5% of the total payments.
The Howard Government
Throughout the first 90-odd years of federation, Labor's opponents often described themselves as the protectors of the federal system, claiming that the division of government powers among various levels of government was preferable to 'complete centralisation of power' in Canberra. In John Howard, however, the Liberal Party has had a leader who has always seemed less than enamoured with the federal structure. Whether as Minister for Business and Consumer Affairs in 1977, forcing the reluctant states to accept a national corporations and securities commission, or as Prime Minister encouraging his ministers to seek uniform practices in many areas of government services, Howard has described himself as a 'nationalist', having little time for what he has called 'state parochialism or state rights'. He also has expressed the belief that had Australia's system of government been established at the start of the 21st century, it is unlikely a federal structure would have been the outcome.
Various Howard Government ministers have similarly expressed their doubts about the federal arrangements. Former Minister for Employment, Workplace Relations and Small Business, Peter Reith, was critical of industrial relations arrangements. More recently, Attorney-General Philip Ruddock has spoken of the need for the 'efficiency' that would come were the Commonwealth to take on more policy areas hitherto the reserve of the states; Minister for Education, Julie Bishop, has attacked the 'dysfunctional' nature of federal policy-making; while Treasurer Peter Costello has spoken of the states 'moving towards the role of service delivery more on the model of divisional offices than sovereign independent governments'.
The most radical views have been those of Minister for Health, Tony Abbott. Observing that 'conservatives believe in small government rather than many governments', he has rejected the standard conservative view of the work of the Constitution-writers. While acknowledging their achievement in creating a new nation, Abbott has claimed that it was through 'accident as much as design' that Australia was established as a federal state and that contrary to accepted wisdom, the Founders actually sought to give 'as much power as possible' to the new national government. Criticising what he has labelled modern day 'feral federalism', Abbott has said that in any dispute between state and national interests, 'Australia' - by which he means the Commonwealth Government - 'must come first'. All of which has seen the Howard Government making decisions well outside the range of powers granted by the Constitution and much in excess of previous Commonwealth governments of all types. There have been two main avenues by which this government has attempted to achieve its ends.
On the one hand, the Howard Government has mirrored aspects of the Whitlam years by linking funding proposals to the imposition of particular policy aims. Queensland and Western Australia accepting three-year funding agreements for their Technical and Further Education (TAFE) systems with the proviso that TAFE staff would be offered Australian Workplace Agreements, is just such an example. Another was former Minister for Education Brendan Nelson's linking of education funding to his desire to see a national school testing program put in place.
The second means has been a consequence of the healthy Commonwealth surplus during the Howard Government's period of office. This has enabled the Commonwealth to make financial grants that effectively bypass the state and territory governments. Payments made directly to local governments for programmes such as the Roads to Recovery are typical. Examples referred to in the 2004 Commonwealth election included the provision of tool boxes for apprentices and the establishment of technical secondary colleges; rather more narrowly focused cases included the building of a bridge in the Queensland electorate of Petrie, or the dredging of Tumbi Creek in New South Wales.
Despite the fact that by 2007 there was the unusual situation of Labor spokespeople speaking out on behalf of the states against a Prime Minister whose government appeared to be weakening the federal system, the views of major party members in the Commonwealth Parliament regarding the importance of Commonwealth power tend to be similar. Nearly 30 years after his loss of office, Gough Whitlam applauded the principle of a national approach to industrial relations: 'Liberal Prime Minister John Howard correctly wishes our national parliament to have jurisdiction to make laws with respect to the terms and conditions of industrial employment'.
When constitutions are written, they are seen by their writers as written for all time. What the writers cannot foresee are the pressures placed on all constitutional documents by the inevitable changes that occur in every society. As circumstances have altered, so governments have been taken in directions that Australia's constitution-writers could not have envisaged.
Australians expect government to do more - and in more areas
One simple explanation for the growth of Commonwealth power is that all governments have gradually accumulated more responsibilities. At the state level, governments do much more than once was the case and at Commonwealth level the story is the same. For example, in 1972 the Commonwealth first became involved with funding child care in a substantial fashion, providing funding for capital grants, recurrent grants and research grants relating to child care. Since then, Commonwealth participation in child care has increased to the extent that it now outlays almost $1.7b annually. As government has done more, so have Australians pushed their governments to maintain standards, to introduce new facilities and generally to increase their commitment to such policy areas. A consequence of the expansion of the Commonwealth into areas that traditionally have been state preserves, is that the Commonwealth is increasingly seen as the government most likely to ensure that people's needs are met. Analysis of polling in the 2006 Queensland election indicated that a significant number of voters blamed the Commonwealth for problems in the state's hospitals, 'believing there are enough funds at a federal level to fix everything'.
The movement of people around the country is much greater than at the time of Federation. As people move residence from one state to another, or within a particular state, it is natural that they should expect that government services they receive should be of equal standard wherever they happen to live. The impact of a mobile population has long been seen in education. For example, a Queensland academic has noted that curriculum discontinuity has been identified by mobile families as a major obstacle for educational success, a problem that is emphasised, 'when children crossed state borders and entered different educational systems, where neither the school entry age nor the year levels match those of the Queensland system'.
This has long been a problem for children of defence force families forced to move as parents regularly take up different postings around the country, and has been cited by Brendan Nelson as a reason for moving to remedy 'the crippling impact of eight different educational systems within one nation'. The age that Australian children start school varies around the country. Does this matter? It certainly creates difficulties for parents planning to move from one state to another. In addition, the Commonwealth Government has argued that lowering the school starting age to a standard age would boost economic productivity and increase the number of students completing Year 12.
Growth of cities
As Australian cities have grown rapidly, so have the problems for government. There is growing pressure to develop rail services, especially to outer urban areas, the great mass of cars on the roads is creating enormous problems, water services are increasingly stretched to near-breaking point, renewable energy and reduction in energy usage are important, and gentrification and rising house prices are forcing people to locate to the outer urban areas or into higher-density housing. The cities themselves are increasingly unable to pay for all of this change and with transportation gridlock threatening in some areas, there is a need to build arrangements into the governmental system that will be able to cope with the increasing pressures. As a House of Representatives committee noted in 2005: 'our cities risk becoming more unsustainable across environmental, economic and social indicators'.
The problem is that the organisation, management and government of cities was not something that Australian politicians of the late-19th century saw as necessary to include in our national Constitution. As a consequence, cities must cope with the impact of uncoordinated policies from all three levels of government that do little to promote harmonised and sustainable development. The cities, in fact, have outgrown our federal arrangements, developing as 'chaotic responses to discrete programmes and policies'. Most local planning takes place at the local government level, yet constitutional responsibility lies elsewhere - the Australian federal system is not necessarily the most effective means of achieving liveable cities.
Changing needs of business
A major reason for Australian colonies federating was the desire to eradicate internal customs barriers - to create a common market within the new nation. Internal customs duties soon disappeared, but Australia has never achieved a perfect common market. In recent years, this has restricted the development of businesses operating across state boundaries. There is the frustration, for example, of businesses having to deal with eight sets of environmental approvals, or businesses finding that they must deal with different employment classifications, which act as barriers to the mobility of skilled workers. Such problems add to costs. A survey has estimated that the cost impact of different state and territory building laws to be between 1% and 5% of company turnover. Although corporations form the major part of nationally operating businesses, the Commonwealth in fact does not have sufficient powers to establish a national corporation-regulation scheme.
From an early stage, Australian governments have had to respond to international events in a way that has tended to impact upon the federal system. From the time of World War I, when the Commonwealth involved itself in the fixing of prices of everyday products, the national government has increasingly felt the need to act in ways that have affected state powers. An increasingly important example has been the way in which Commonwealth power has been used to implement international treaties or conventions. In 1936 the High Court established that the Commonwealth could use its power in relation to external affairs to implement international treaties or conventions, even in areas where it lacked formal power. An example of the consequences of this judgment was the Tasmanian Dam case of 1983, wherein the High Court said that the Commonwealth's power over external affairs enabled it to force Tasmania to halt the building of a hydro-electric dam, on the grounds that the area to be flooded was World Heritage Convention-listed. The fact that the Commonwealth did not have direct power over dam building was constitutionally irrelevant.
Overall, use of the 'external affairs' power by the Commonwealth is an important political weapon which enables the national government to involve itself in policy matters once considered the sole responsibility of the states, such as the preservation of the environment. As Mr Justice Dawson, formerly of the High Court, has noted: 'the Commonwealth presently has the capacity to cut a swathe through the areas hitherto thought to be within the residual powers of states'. This is emphasised by the pressures of globalisation, which often require speedy decision-making at the highest level of government. In effect, all governments are answerable to the international community.
WHERE THE SYSTEM RETAINS VALUE
The federal system has thus altered markedly and inevitably since Federation, particularly in respect to the accumulation of power by the Commonwealth government. To acknowledge this, however, is not to say - as some do - that the federal system is without merit.
Since the early years of the Australian nation, three important structural factors have meant that cooperative relations between the Commonwealth and the states have often been valuable in enabling the Australian federation to function relatively smoothly. The first has been the Constitution itself, which creates a concurrent federal structure, where the two levels of government have powers in different policy areas. As noted by the Federal-state Relations Committee of the Victorian Parliament: 'effective intergovernmental relations are essential to the successful management of the inevitable overlap between the activities of governments'. Secondly, the need for intergovernmental cooperation has been increased by the emerging financial dependence of the states on the Commonwealth, which soon involved the Commonwealth in many areas of policy where the states retained the necessary administrative machinery to implement policies. Finally, it was soon realised that in any federal system there must be cooperation between governments if they are to deal successfully with policy matters not covered in the national constitution.
An example of the latter occurred in 1939 when the Commonwealth gave £1,000 for the purpose of bushfire relief in Tasmania. From that time the Commonwealth, while regarding the handling of most disasters as a state matter, came to recognise the need for a level of financial assistance that a state would not be able to afford. Today, the Department of Families, Community Services and Indigenous Affairs has responsibility for coordinating recovery assistance on behalf of the Australian Government. These arrangements, which apply to natural disasters caused by bushfire, earthquake, flood or storm, are a significant example of the intergovernmental cooperation that helps give continuing life to the Australian federation (see the article
Australian Government disaster assistance in the Income and welfare chapter).
Over the years there have been many other examples of cooperation between the governments, indicating that the federal system often allows governments to respond appropriately to deal with perceived needs. For example, much has been done through Premiers' Conferences (today, the Council of Australian Governments), councils of ministers such as Attorneys-General, and a large number of ad hoc or standing administrative groups. Such bodies remain in constant communication, exchange information, and sometimes work together on joint operations. Cooperation can also take the place of joint programmes, formal agreements, intergovernmental administrative arrangements and occasionally the passage of uniform legislation. Intergovernmental Agreements of recent years have included those dealing with food regulation agreements (2000 and 2002), foot and mouth disease (2002), research involving human embryos (2004) and surface transport security (2005).
An example of ministerial cooperation is the area of justice administration. The Australasian Police Ministers' Council (APMC) was established in 1980 to promote a 'coordinated national response to law enforcement issues and to maximise the efficient use of police resources'. Its initial role was the development of a coordinated approach to police policy and operations, and in May 1986 this was broadened to include 'the coordination of the national attack on organised crime and the cooperative efforts needed to achieve that goal'. More recently its agenda was extended to include a wide range of national law enforcement policy development and implementation activities including DNA legislation, a national sex offenders registry and gun control. Since 1993, the APMC has been part of the Ministerial Council on the Administration of Justice, along with the APMC, the Inter-Governmental Committee of the Australian Crime Commission and the Corrective Services Ministers' Conference.
The less politically controversial an issue, the easier it is to achieve intergovernmental cooperation - it is easier to achieve cooperation in matters to do with food regulation than with the uniformity of school curricula. To a major degree, cooperation is easier to achieve in areas where there is no political stimulus for the Commonwealth to achieve national uniformity. Joint action therefore emerges primarily for reasons of 'political and administrative convenience'.
But politics is never far from the surface. The desire to collaborate with other governments is invariably a tactical decision and can soon be cast aside by conflict between politicians who often reject cooperation for short-term political reasons. There is also the impact of perspective. The Commonwealth view of cooperation between governments is often driven by a desire for uniformity, whereas state and territory attitudes are very much influenced by a perception of differing local needs and attitudes. A common consequence is frustration on all sides. For all the political difficulties expressed, however, intergovernmental cooperation plays an important part in maintaining the worth of the Australian federal system.
In any nation, local communities do have particular needs, some of which may well be beyond the purview of national policy. The Australian federal system provides two main ways in which such communities can make their own rules. Local government councils - the creations of state legislation - can achieve objectives in many policy areas, while state or territory governments facilitate decision-making within the borders of the relevant state or territory. Federalism therefore provides an institutional means of recognizing the need for communities to govern themselves in some policy areas in accordance with their own perceived interests:
Federalism institutionalises a system of government predisposed to a more participatory and accessible mode of operation. It is potentially more participatory because the multiple levels or arenas of governance multiply the opportunities for meaningful citizen involvement in the political process. It is potentially more accessible because of the multiple access points opened up for citizen access to the governmental sphere.
Policies can thus be closely tailored to the local needs. For example, Western Australian industrial regulation, introduced in response to the needs of its remote mining industry, allowed more intensive working hours, long before they were allowed for in federal awards.The existence of such local needs is in fact likely to be a major factor in ensuring that federal government remains the basic Australian structure. As Professor Greg Craven of Curtin University of Technology puts it, 'real differences of place interact with equally real political and social differences'.
Advocates of federalism see an advantage in different jurisdictions having power over similar important areas of administration because it enables experimentation by one government before all take up a particular policy. Among the better known examples have been South Australia's leadership of social reform in the 1970s, Victoria's introduction of compulsory seat belts in 1970, and the Northern Territory's development of flexible teaching strategies during the 1980s. Because of the poor outlook for the Victorian economy in the early 1990s, the Kennett Coalition government was able to push the policy frontiers, and experiment with a raft of governmental reforms that were not politically possible elsewhere at the time. Most of the experiments, such as the massive re-creation of the local government system, were successful and were subsequently adopted to some degree by other states.
The other side of experimentation is that mistakes - and there are always likely to be some - can be isolated in a particular state or states that have tried a new policy approach. For example, it has been claimed that the education policy of the Carr Labor Government in New South Wales had been shaped by Labor's acknowledgment of weaknesses in the Victorian Certificate of Education introduced by the Cain Labor Government during the 1980s. In turn, Victoria under Premier Kennett built on the experience of the Carr Government's successes in this area. Some say that this is also a warning about seeking national uniformity in policies, for there is no guarantee that some mistakes will not be made by the Commonwealth Government as well as by the states: 'a federation, … is not a model of efficiency'.
WHERE THE SYSTEM FALLS SHORT
Despite the long-term attempt by the Commonwealth Grants Commission to ensure that there is an equality of services across the nation, critics claim that for as long as states retain important policy-making powers the uniform delivery of equal services remains impossible. It is claimed that a basic problem is that while the Grants Commission has delivered equal capacities, there is no obligation on the states to use these and therefore the very existence of the federal system can have the unintended consequence of introducing and maintaining inequalities across the nation. Two policy areas where this can be seen are those of Indigenous affairs and policies of relevance to Australian women.
One major difficulty for Indigenous people has been that it has not always been clear where governmental responsibility for particular services actually lies. Apart from areas of Commonwealth responsibility, many of the day-to-day living needs of communities are provided by such agencies as local governments or state departments dealing with social welfare matters. The constitutional inexactitude so typical of federal systems has created administrative grey areas that protect governments and frustrate their clients. In such a situation, Indigenous recipients of services can be left guessing which government is relevant to their needs.
Professor Kim Rubenstein of the Australian National University has noted the difficulties the division of power in the area of family relationships has caused women and their families. An example is the Commonwealth possessing the power to legislate with regard to de facto couples' disputes over children, but not in regard to their disputes over property. Rubenstein also notes the Commonwealth's relative lack of power in regard to child welfare matters and in particular, issues relating to child protection. Essentially, the difficulty lies in the fact that the Commonwealth has limited and piecemeal powers in regard to family relationships, which have made the lives of women 'more difficult and time consuming' than they need have been.
Living on a border
Administrative differences can create difficulties for residents of particular communities. In a federal system the obvious way in which regional governments are organised is within the borders of each. With different states having different policies and administrative arrangements, however, residents close to borders have found that 'dealing with different rules and regulations between the states …(can become) an irksome way of life'. The range of problems has become large, including such matters as taxi licensing, mental health services, fishing and boating licences, operating rules for local police, fire and ambulance services, trading hours, taxation, daylight saving and the use of 1300 and 1800 telephone services. In many cases it has been the creation of different administrative arrangements that annoys and frustrates local residents, but in many other cases the difficulties can be far more serious. This was pointed out in a submission from a resident of the near-border Victorian town of Beechworth to the 2005-06 Senate select committee on mental health:
The continuing problems of state cross-border anomalies is an on-going source of frustration that needs to be addressed with some urgency if effective and timely care is to be provided to clients.
Governments have been alert to such frustrations - at different times New South Wales has had the Border Anomalies Committee (established 1979), the Regional Communities Consultative Council (operating under the aegis of the Premier's Department), and the One City Plan designed to create a seamless administrative structure for Albury-Wodonga (2001). All achieved some improvement for local residents, but not enough to dissuade various Members of Parliament from border electorates from supporting a private member's Bill seeking to establish a Cross-Border Commission in 2004-05.
Too much bureaucracy?
The Business Council of Australia (BCA) is critical of the current state of the Australian federal system. In particular, the BCA notes that the existence of multiple governments, each having a finger in particular policy pies, produces a marked 'duplication of effort and inconsistencies in programs and regulations'. The outcome is not only a bureaucratisation leading to an unnecessary increase in the costs of public administration, but also a heavy financial burden for firms attempting to do business across Australia. This is probably an inevitable consequence of having different law-making areas within a nation, but critics believe that in the modern, globalised economy it is a burden that should be addressed with the aim of eliminating it.
This bureaucratisation can be seen particularly clearly in regard to government regulation. The Commonwealth Government's Taskforce on Reducing Regulatory Burdens on Business has drawn attention to the size of what it sees as major problems for Australian government. For example, there are more than 1,500 Commonwealth Acts of Parliament, plus approximately 1,000 statutory rules in force, plus an unknown amount of other Commonwealth 'subordinate' legislation. Each state and territory administers a large body of its own legislation and regulation - in Victoria 69 regulators of business administer 26,000 pages of legislation and regulation. It is claimed that there are 'literally millions' of pages of rulings, explanatory memoranda, and advisory notes, and one indicator of the extent and complexity of regulation that affects business is that the three levels of government administer over 24,000 different types of licences for businesses and occupations.
To all of this could be added the major example of inconsistent policy that is the different workers' compensation regimes across the nation. In a BCA-commissioned report (October 2006), Access Economics estimated that such problems cost the nation many millions per year.
Australia's infrastructure - electric power generation facilities, roads, railways, telecommunications, airports, potable water, irrigation, waste-water management and so on - is ageing and in many cases is in urgent need of replacement or upgrading. State governments have traditionally been the main providers of such infrastructure and therein lies a major problem, for the development and maintenance of infrastructure suffers in Australia from 'a lack of integration and coordination … with the three tiers (of government) each having separate and sometimes overlapping roles and responsibilities'.
The Australian federal system imposes particular complexities and constraints that are not experienced in many other federations, for Commonwealth-state financial relations have 'a pivotal role in shaping infrastructure investment'. In such a setting, with many infrastructure issues crossing state borders, it is often argued that national leadership can produce large benefits. An increased need for infrastructure development will be a pressing issue in the coming decades, but it is uncertain whether the federal system will be able to cope with this.
Weakness of local government
Local government exists in Australia as the creation of the states - most controversially, not only can the state parliaments establish local government councils, but state governments can dismiss them, quite arbitrarily. None of the colonial politicians who drew up the Australian Constitution apparently believed that local government should be given specific constitutional status and, therefore, constitutional protection. Despite this, local government has been affected by the ongoing story of Commonwealth-state financial relations, as well as by the increased power of the Commonwealth Government to influence such local responsibilities as road-building, housing and the provision of social welfare arrangements. There is an argument suggesting that as the Commonwealth becomes stronger, so the right of people to govern themselves in local matters should be given constitutional recognition - as it is in the state constitutions.
Twenty years ago, the Commonwealth Department of Local Government and Administrative Services supported constitutional recognition of local government on two grounds: because local government was elected and publicly accountable, and because local government participates in the federal system of public administration. The Constitutional Commission (1985-88) agreed, recommending that a new section 119A be added to the Constitution:
Each state shall provide for the establishment and continuance of local government bodies elected in accordance with its laws and empowered to administer, and to make by-laws for, their respective areas in accordance with the laws of the state.
An attempt to amend the Constitution in this way failed in 1988, but the issue is still relevant. In 1997, the Australian Local Government Association stated that:
Local governments are elected to represent their local communities; to be a responsible and accountable sphere of democratic governance; to be a focus for community identity and civic spirit; to provide appropriate services to meet community needs in an efficient and effective manner; and to facilitate and coordinate local efforts and resources in pursuit of community goals.
To these ends, the principle of elected local government must be enshrined in the Australian Constitution and the constitutions of each state and the Northern Territory.
On 6 September 2006, a resolution was introduced in the House of Representatives, which said inter alia that each house:
... recognises that local government is a part of the governance of Australia, serving communities through locally elected councils ...
... acknowledges the role of local government in governance, advocacy, the provision of infrastructure, service delivery, planning, community development and regulation.
Despite its passage through the Parliament, the resolution still fell short of what many local government advocates would prefer.
Avoidance of responsibility
Commonwealth and state governments, of all parties, have long used constitutional grey areas to deny responsibility for weaknesses in their performance. Criticism of the Commonwealth over administrative failures in particular areas will see the Commonwealth blame the states which, we are often reminded, have the constitutional responsibility of the particular policy area.
With the emergence of specific-purpose payments, the later establishment of Grants Commission, and the creation of the GST, the avoidance of responsibility has often been seen in claims by the states that the reason they cannot perform better has been the niggardliness of the Commonwealth Government. A Commonwealth Minister for Health has spoken of the problem of public hospitals, part-funded by the Commonwealth, but wholly run by the states. The consequences of this has been 'the states blaming the Commonwealth when anything goes badly wrong' - as in the case of the Labor government in Queensland in the 2006 state election.
A more recent example is of the increasing practice of state (and occasionally the Commonwealth) governments to shift costs to local government. According to the Commonwealth Grants Commission, local government has been taking on extra functions due to governments devolving responsibilities for new functions, or where the complexity or standard of a service is increased, with local government picking up the increase in cost. Cost-shifting can also involve a state government withdrawing from a service, with local government forced to step in to maintain the service, or withdrawal of Commonwealth or State funds forcing local government to continue a service due to public demand. An example is library funding, which has increasingly been reduced by state governments, forcing local government to assume an extra funding responsibility rather than abandon the service altogether. All of which gives more ammunition for the federal system's critics.
WHERE TO FROM HERE?
Where is the Australian federal system heading? It is ironic that at a time when many are expressing doubts about the value of Australian federalism, the federal idea is being extended throughout the contemporary world. Various countries - the United Kingdom and Spain, for example - are attempting to accommodate internal diversity by devolving power to regional governmental bodies. In Australia, by contrast, many believe the original federal model has had its day.
A rigid written Constitution
The Constitution is a federal document, drawn up by regional politicians determined to protect the long-term position of the states. Voters in the Federation referenda were warned incessantly about the need to protect the place of their colony in the future union, and in the years since voters have often been asked to show support for their state, most notably in regard to constitutional amendments proposing to increase central government power. Voter response has been spectacular - all 17 constitutional amendment proposals to increase Commonwealth economic power have been rejected, as have four others dealing with non-economic powers. Two referenda suggesting Commonwealth involvement with local government have also failed. Constitutional amendment can thus be difficult if it strays outside the federal parameters that can seem to apply as much today as they did in the late 1890s. Whatever the merits of a proposal to alter aspects of the Australian federal arrangements, the difficulty of constitutional change in Australia makes it hard to see such changes being made formally to the Constitution: 'Australians will not alter aspects of the federal system of government if they perceive its basic structure to be under threat'. The problem is that occasional changes to the Constitution so as to bring the document closer to the current realities of government, are not made. The Constitution thus can appear less and less relevant to the real world of Australian government.
Abolition of the states?
Can a constitution written in the late-19th century cope with the pressures - both known and predicted - of the 21st century? This question is illustrated in a writer's wondering if the continuance of the 'sovereign' state of Tasmania can be justified:
Tasmania continuing to be a sovereign state is increasingly hard to sustain as a serious proposition ... It is pure folly to think the political, legal and social infrastructure of this island of fewer than half a million people can ever attain a consistently high standard.
The Abolish the States Collective (ASC) is a private organisation whose members believe that the only way Australian government can be made relevant and effective in the early years of the 21st century is for state governments to be abolished 'at the earliest possible opportunity'. In justification of this position they claim that state governments are divisive, are wasteful in their duplication of government services, and place an enormous cost burden upon the nation, putting Australia at a competitive disadvantage in an increasingly competitive world.
The ASC maintains that state government functions could be performed effectively at either the national government level or at a level closer to the people than the states:
We believe that Australia needs a single, effective national government which would assume most of the powers and responsibilities held by the present state and federal governments. We also believe our national government should administer uniform national laws, but we endorse flexibility in the local application of such laws.
Were the states to be abolished, how might the replacement structure be organised? One idea would be for a two-tier system to be created, made up of the national and 'regional' governments. As early as 1920, the Nationalist MHR, Charles Marr (NSW), was claiming that 'One Parliament for Australia, with some bodies - say, county councils - would provide a far better administrative system than exists today with the state and Federal Parliaments'.
In 1974 Prime Minister Whitlam stated:
We should have a House of Representatives for international matters and nationwide national matters, an assembly for the affairs of each of our dozen largest cities and regional assemblies for the few score areas of rural production and resource development outside those cities.
More recently a combination of national government and regions has been advocated by various observers including former independent MHR, Ted Mack, New South Wales Independent MLA Clover Moore, Lindsay Tanner MHR (ALP), and former Liberal Commonwealth Minister for Regional Services, Territories and Local Government, Senator Ian Macdonald.
Re-allocation of powers?
Not all believe the states should be abolished, preferring to push for a modernising and a re-allocation of powers between the Commonwealth and states. Professor George Williams of the University of New South Wales, for instance, claims that the Constitution-writers' granting of power over international trade and commerce to the Commonwealth, but not power over trade within state borders, might have made some sense at the end of the 19th century, but not at the beginning of the 21st century. Williams believes that in such a setting it makes little sense for businesses to have to deal with nine different Australian jurisdictions. In addition, he points to the constitutional barriers to the creation of an integrated national judicial system and the fact that the Commonwealth lacks a general commerce power. Williams also believes that although urgent problems relating to controversial policy areas such as health and education can be resolved by political compromise, such arrangements are unlikely to be satisfactory over the long term. The system can be reformed and the advantages of federalism retained, but it is important to analyse 'whether the division of powers agreed to in 1901 is the best model for today'.
States as 'service deliverers'?
Despite the enthusiasm with which abolitionists propose the eradication of the states, it is quite likely that the three tiers of government will be retained. This is partly because of the political difficulties in removing them - the states run large governmental apparatuses, being responsible for three-quarters of all public sector employment. There is also the possibility that the states might be used more efficiently within the governmental system. Professor Pat Weller of Griffith University has suggested the likelihood of there being a rationalisation of funding by the Commonwealth government. With the states increasingly unable to raise most of the money they need for their administration, the Commonwealth will be more and more tempted to direct s. 96 specific-purpose payments in a way that aims to reduce the differences between state programmes. Weller speaks of the states delivering the services 'within a framework of Federal funding and program design'. Former Labor Queensland Premier, Wayne Goss, has suggested that such a change would see a significant alteration in the relationship between the centre and regions in Australia: 'it is most likely that regional governments will not be a significant force but rather providers of services determined, not entirely but to a significant degree, by the national agenda'.
More recently, a similar arrangement has been suggested by a number of prominent Liberals, including Commonwealth Treasurer Peter Costello. They have suggested that service policy-making become the sole responsibility of the Commonwealth, with the states and territories acting as the deliverers of the services, such as education and health. Such an arrangement would, at least on paper, see the maintenance of the federal structure, even if the realities of power and administration were rather different from the outline put in place at the time of Federation. It is not clear where local government, which is controlled by state legislation and state governments, would fit into such an arrangement.
Where to for the Australian federal model? There is still much support for a political system that has worked quite well since its beginnings in 1901. However, supporters, as well as those who disparage the system, believe there are problems. Even the Premiers see serious problems that need repair. There is a general consensus, therefore, that the Australian federal system does not work as well as it might. The question for the nine governments is: what should be done to enhance its performance and its reputation? The way forward is far from clear, particularly as any move to wholesale change will inevitably become enmeshed in party politics. It has been forever thus.
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This page last updated 3 June 2010