Riding Roughshod Over States

by Jack Waterford - Canberra Times

Perhaps it's simple political opportunism seeking a theory to justify it. But John Howard's interventions in areas traditionally falling within the state purview is moving along nicely from being a mere temporary trawl for votes to a new division of powers in federation. With a nice, if perverse bit of history, behind it.

Australians care about the quality of the services they get, but are not very strongly focused on which level of government they come from, the Prime Minister has been insisting, as an explanation for very local (and very marginal seat-oriented) forays into state and local government activities. He might well add that they do not care much either about whether the services are provided through a traditional public service framework, or are contracted out to the private sector. What matters is whether there is a service and how well it meets the perceived needs.

He has a good argument that the Commonwealth has a natural interest in the differential quality of services, however much they are rationalised as being the result of local political decisions about how the local cake should be split up. Particularly in these days, when communications technology has abolished a good deal of the tyranny of distance, citizens expect at least similar levels of basic services everywhere particularly in health and education. And, as we move towards one market and one nation, the need for different state-level rules about trading, consumer standards, constraints on business activity, road rules, or even different criminal laws is often an obstacle to efficient administration.

Moreover, given the Commonwealth's role as the primary tax gatherer and tax distributor, the Commonwealth is repeatedly blamed for any shortfall of services, and, as often as not, for any local differences in service level and provision, even when these have been a result of local politics.

Queensland, say, can deliberately under-resource hospitals, preferring instead to pour its money into ill-considered water schemes; but, down the track, it will as often as not use the "disadvantage" of lower levels or quality in health care to demand that Australian taxpayers make up the shortfall. And, if there are mixed responsibilities, there is the burden on the Commonwealth, or the Australian taxpayer, of cost shifting and blame shifting.

Howard has long been the most radical centrist the Commonwealth has known, ready to use constitutional power to override or overwhelm the states, or increasingly, to attach conditions of state performance. At first, he worked hard to achieve some partnership with the states, through the Council of Australian Governments, but increasingly he has become impatient with consultation and inclined simply to command, as with, say, the takeover of industrial relations, national standards in education, or the invasion of Aboriginal communities in the Northern Territory.

He has commented, accurately enough, that if we were federating today, instead of more than 100 years ago, citizens would have a different view about the appropriate divisions of responsibilities. That's true enough, though most Australian politicians, observing the difficulty of changing the constitution, have tended to accept the status quo as a given, at best nibbling at the edges. Howard seems more focused at tackling the problem head-on, and in positing new frameworks of government service delivery, hardly bothers to bow to formal state, or even local government boundaries.

"So much of the debate about Commonwealth-state relations concerns the respective roles of the two levels of government, as if an appropriate balance between the two were an end in itself," Howard said on Monday. "To me, that misses the point. We should be neither centralists nor slavish adherents to states rights. We should be focused on outcomes, not systems.

"We should be aspirational nationalists, and applying this spirit to the governance of the Federation will be my third goal of a next term. We should want and aspire to achieve the best possible outcomes for Australians wherever they might live and by whatever method of governance will best deliver those outcomes.

"Sometimes that will involve leaving things entirely to the states. Sometimes it will involve cooperative federalism. On other occasions, it will require the Commonwealth bypassing the states altogether and dealing directly with local communities.

"I've often said that there are two powerful trends in Australia today: localism and nationalism. Neither are of a brash, exclusivist variety; both embody a very Australian brand of quiet, understated pride and patriotism.

"Our local communities are objects of loyalty and solidarity that transcend the costs and benefits of daily transactions. Commitments to town and team, neighbourhood and network, provide much of the texture of social engagement and what we think of as our quality of life.

"We in the Coalition believe in trusting people. We believe that by giving people more control over their lives at the local level, we encourage responsibility and so build a better society.

"That includes looking at new ways of delivering government services and tackling problems that are more responsive to individual and community needs. The old rigid state monopoly models for health, education, employment and welfare services have become increasingly obsolete.

"The partnerships this Government has built with the community sector, business and social entrepreneurs represent an under-appreciated thread of modern Australian Liberalism. Many initiatives such as the Job Network and our Family Relationship Centres are now being looked at internationally as new ways of delivering services.

"Other Commonwealth programs that embody this localism based on grassroots community involvement include Investing in Our Schools, our chaplaincy program, Australian Technical Colleges, the National Heritage Trust and Community Water Grants. Most recently, the Commonwealth has indicated a willingness to support the Mersey hospital in Tasmania under a new model of community involvement.

"The time has come to look afresh at how the Commonwealth can support social and community entrepreneurship at the local level. Further engaging the voluntary sector will be a priority."

Oddly, some of this sounds remarkably similar to the Australian Assistance Plan, the innovative program developed under the Whitlam Government which sought to shift power and resources away from centralised bureaucracies at both state and federal level to regional councils, responsible for planning and coordinating services in their regions.

The AAP, moreover, aspired to defeat one of the great bugbears of government in the community of services provided by multiple agencies, each with their own hierarchies, and priorities, far from the action. Instead it wanted regional officials with power to draw together, locally, all of the strands of government agencies. The aspiration, indeed, was to get local level coordination of both Commonwealth and state activities, a little along the (not fabulously successful) pilot COAG efforts in a number of Aboriginal communities.

The methods, and the notion of regional services, also got a fillip from the Coombs Royal Commission into Public Administration still a great repository of good ideas, bureaucratic and political.

AAP regions were not constructed around local government boundaries, and, in some cases even overlapped state boundaries, fuelling some of the state paranoia that it was a wicked Whitlam Labor plot to demolish federalism by stealth. On that account, and legal challenge, Malcolm Fraser killed the plan 30 years ago. That one of Fraser's ministers might be thought to be reviving it, or at least borrowing from some of its ideas, might seem perverse. But there is no particular copyright on politically useful ideas, and, in time, ideas once denounced as dangerously radical are dressed up again as nationalistic localism.


Federal Intrusion In State Affairs Erodes Accountability

by Fred Argy - Canberra Times

Prime Minister John Howard is gradually turning his back on cooperative federalism and making enforced incursions into areas of state responsibility. He is doing that by using both his constitutional and fiscal powers (through tied funding).

The Prime Minister is even seeking to interfere directly in local affairs. He says that "we should be focused on outcomes, not systems" and that "local communities want good services and care little what levels of government deliver them".

No-one denies the need for coordination and harmonisation of policies and regulations across the country in some areas (such as industrial relations and river management) and there is nothing wrong with the Commonwealth adopting a general "overwatch role". But should Commonwealth interventions be done on a unilateral or cooperative basis? And who in the structural hierarchy of government should be deciding and taking responsibility for local outcomes?

Assuming the Prime Minister's centralist approach to federalism is not just a transient politically opportunistic move and that it will endure as a template for governance after the elections, what is the rationale for it?

It is no answer to say that, thanks to the High Court, the Commonwealth has the constitutional power. The High Court seems prepared to allow much latitude here but it does not mean the power has to be used to the full.

Similarly, it is not relevant that the Commonwealth happens to have much more fiscal firepower than the states partly because of the long-standing federal-state fiscal imbalance and partly because the Commonwealth is getting the lion's share of the fortuitous revenue windfall from the export price boom. This problem can be rectified by correcting the fiscal imbalance and/or converting specific purpose payments into more general grants.

In short, the constitutional and financial powers of the Commonwealth provide it with the instruments of action but they do not per se justify what is happening to our federal system. So where is the underlying rationale for the growing centralisation of power in Canberra?

It can hardly be argued that state public servants are less professional and competent administrators than their federal counterparts. Nor is the Commonwealth more economically rational in its approach to policy. Indeed when one examines its illogical stance on government borrowing for infrastructure and its recent populist interventions in areas like state technical training, hospitals and local council mergers, the opposite may be the case.

So we are left with one explanation for the Commonwealth's centralist grab a desire to impose its brand of political and policy ideology on the states, even at the local level.

This raises a number of important questions of democratic principle. Are Australians happy to see such a concentration of power in the hands of a few federal leaders (and particularly the Prime Minister) or do they want to see more checks and balances in the system? Are communities happy to leave decisions on local services to Canberra the most remote level of government? Do they want policy responsibilities to become so muddied that voters do not know who to hold accountable? More fundamentally, are Australians willing to go along with the gradual destruction of the key advantages of federalism the opportunity it provides for policy diversity, competition and choice?

These questions need to be debated and Australians given a chance to speak on the future of federalism. What about a plebiscite?


Fred Argy is a former Treasury officer and a Visiting Fellow at the ANU.