Tony Abbott was right then, and is wrong now. The federation is still Australia's biggest political problem
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Version 0 of 1. We knew what we were getting into when the Abbott government kicked off a conversation about “reforming” the federation. The issues paper released by the Department of Prime Minister and Cabinet last month made it quite clear what sort of conversation we were going to have: Our Federation is not, as some argue, a relic from the past, broken beyond repair and ill-suited to the times. Rather than seeking ever greater centralisation of power in the national government as a way of dealing with increasing complexity, now is the time to strengthen the way our federal system works by being clear about who is responsible for what. This was a powerful rebuke to centralists, and seemed strange given Tony Abbott’s previous statements on the federation. In a chapter of his 2009 book Battlelines, titled “Australia’s Biggest Political Problem and How to Fix It”, Abbott wrote that there are “few problems in contemporary Australia that a dysfunctional federation doesn’t make worse”. He went on to say: There are those who mythologise the states as the ideal deliverers of complex services and as bulwarks against the allegedly dictatorial tendencies of the national government. Abbott went so far as to draft a new provision for the constitution that would allow the commonwealth to put the kibosh on states’ rights. If the Commonwealth wanted to take over an area of state responsibility, under Abbott’s proposed provision, it need only pass a bill twice. His resolve was not to last. A (perceived) need to balance the federal budget has led to a desire to shift costs to the states. That’s difficult to argue while simultaneously denigrating their ability to deliver services. Thus the rapid change in tune: federalism isn’t a relic of the past – it just needs the states to do more. This explains yesterday’s launch of the Committee for Economic Development of Australia’s A Federation for the 21st Century report, some 187 pages of confusing and confused assertions in support of federation. According to Ceda’s report, duplication between state governments, and between the state and federal governments, isn’t an indication of inefficiency and waste, but “may well be an outcome, indeed a rationale, for federations that is actually desired”. The Commonwealth didn’t accrue more responsibilities because states have been systemically incompetent but because of the “dark arts of divide and conquer, ambush, [and] veto”. What’s more, “any attempt to identify the ingredients that caused the swirls in the marble cake will fall foul of the thick layer of icing covering the governance arrangements”. (Actual quote.) Over the next year or so, in the lead up to the Abbott government’s white paper, we will see a series of reports from think tanks desperately clutching at federation straws. We will hear the usual rhetoric about Canberra’s “inability” to deliver services (a disingenuous assertion, given that the Commonwealth’s ability to deliver services is curtailed by federalism). We’ll hear lofty ideas about how “jurisdictional competition” creates “democracy laboratories”, leading people to pick and choose the state they live in, according to policy, services and laws. We’ll end up ignoring the absurd reality, of two people living either side of a river enduring two different regulatory environments, and the perverse outcomes that flow from that. And dodgy mathematics will be used to explain that having eight different parliaments is somehow cheaper than only having one. Federalism appeals to only two kinds of people. First, it is a godsend for libertarians who desperately want central governments to be incapable of delivering welfare programs. Around the world, entrenched federalist constitutional provisions have thwarted the ability of governments to pursue much needed reforms. Famously, the supreme court of the United States found, in Hammer v Dagenhart, that the federal parliament did not have the ability to institute child labour laws; it took more than two decades for this states’ rights decision to be overturned. In Australia, Gough Whitlam’s proposals to reform Australia’s workforce were frustrated by Liberal state governments and a constitutional inability to enact relevant legislation. Second, it appeals to state politicians who are maintained at the taxpayer’s expense. Abolish the states and these lunchbox legends, who couldn’t cut it in federal parliament, would have to get real jobs. This all makes Abbott’s backflip on federation all the more suspect. In his speech over the weekend at Tenterfield, he claimed he was a “a pragmatic nationalist” and so “rather than pursue giving the commonwealth more authority over the states” he thought “better harmonising revenue and spending responsibilities is well worth another try”. Despite the title of his chapter in Battlelines, it seems there is a bigger political problem in Australia: political opportunists who abandon positions when the going gets tough. Federalism does not and never will suit the needs of the ordinary voter. It is absurd that a politician can be elected to federal parliament, with aspirations to make life better for their electorate, only to find that they are prevented from doing so by a federal arrangement negotiated in the 1800s. In a modern democracy, the individual voter should be the atomic base of the political system. All Australians should be governed by the same laws – what’s good for the Queenslander is good for the Victorian. Instead, we have a myriad of different criminal codes paid for by a complex array of inefficient state taxes (like stamp duty, payroll tax, and land tax). In an economically efficient democracy, we would have one government responsible and empowered to implement taxation policy. But the federalists’ thought bubbles keep coming: the commission of audit entertained the idea of allowing the states to collect income taxes earlier this year. As long as we entertain this nonsense, we’ll stay trapped in endless discussions about vertical fiscal imbalances and the like. The state-based system might have made some semblance of sense back in the late 1800s, where the technology was incapable of supporting one central government. Now with modern transport and communications, it makes no sense to labour under the restrictions of the past. The Ceda paper shows how weak the federalist case is. Importantly, it shows how eager federalists are to ignore the legitimate expectations of the ordinary voter. If we want the politicians we elect to be empowered to pursue the reforms we voted for, any reform of the federation needs to kick off the training wheels and leave the states behind. In time, we should become a unitary nation with one parliament possessing plenary powers. |