Now is the spring of our mild content

Of course, our federalism has its flaws, many which have undermined the institution itself. The founders’ reliance on the tripartite defences of a States-House Senate, limited central powers, and an independent High Court collapsed when the Senate operated along party lines and routinely endorsed laws that undermined federation and cheerfully upheld by High Court appointees of the Commonwealth Executive. Of course, this is easy to predict with hindsight. In the pre-party days of the 1890s, Deakin was the exception in predicting the dominance of the Commonwealth.

Rather less disputable is the proposition that the federal financial arrangements of the new Constitution would end in disaster for the states. The founders were great statesmen and excellent constitutionalists, but by and large, dreadful accountants. With an enduring financial settlement proving beyond them, they left transitional arrangements in place. Inevitably, the Commonwealth’s superior taxing powers and the wider centralising developments reduced the states to financial subservience long before they realised they had foregone most of their constitutional independence.

One critical but understated outcome of this process is that not only do the oxygen-starved states compare unimpressively with their former selves, but their decline is readily and painfully apparent—not just to the citizenry at large but also to themselves. In terms of popular perception, this means the substantive problems of the states are exacerbated by Australians, who quite rightly, see states as waning institutions. Those seeking favours and kudos turn towards the ascending sun of the Commonwealth, particularly when it streams rays of useful cash. Compared to Canberra and its coffers, the states present as faintly down at heel propositions, and are regarded accordingly.

Within the states themselves, the ongoing psychological effects of perpetual decline have been almost as unhelpful. Some states, have developed a range of less than feisty learned behaviours in response to repeated pulverisation by the Commonwealth. Like the Commonwealth, the states too regard themselves as lesser orders of constitutional being. They are not only beaten before they start, but know it, and act accordingly. The consequence is that more ‘obstreperous’ states find it difficult to form united fronts because some other state is ready to sell its patrimony for a mess of pottage. Trust in such circumstances is not an option. Any jurisdiction prepared to take a stand against the Commonwealth knows it may end up standing, if not alone, then in limited company. The only thing more destructive to self-respect and independence is knowing that you are likely to lose again. Worse, after the first thousand or so catastrophic defeats at the hands of the High Court, the Treasury, or other agencies of Commonwealth dominance, hope not only starts to fade but injury can, in more submissive states, subtly hurt and matter less and less. Demoralised states make for compliant (or resigned) states subsisting within a demoralised and compliant federation. Against such tendencies is the inter-governmental agreement on federal financial relations, which has at least given the states a principled line to hold; however, it may bend and bulge in practice.

In general terms, it sometimes seems the survival of Australian federalism in practical terms owes much to the complete implausibility of any alternative. Conversion to a unitary state would flounder catastrophically upon the conservatism of Australian voters when faced with any referendum, let alone one recasting the entire Constitution, which is what would be involved. Sporadic outbursts of enthusiasm for replacing federalism with ‘regionalism’ are recognised for what they are—Trojan horses used to advance central power by dissecting states into smaller, more manageable units.

Against this gloomy posterity is the recent resurgence in the reputation of Australian federalism, and whether it will substantially improve the position of the states and the federalism they comprise. In this context, Australian federalism is highly volatile and deeply responsive to economic and political change within the nation. For example, in the short term, the emergence of relatively strong coalition governments in all eastern states and Western Australia obviously will alter the dynamics of Australian federalism, not only for the Gillard Labor government but also the style and practical considerations of any potential conservative successor. In the much longer term, the transformation of the Australian federation from an asymmetric one in which two powerful states—NSW and Victoria—dominated four relative minnows, will be profoundly challenged by the ongoing emergence of Western Australia and Queensland as potent economically driven middle powers.

There are perhaps three reasons why the next few years may see a modest resurgence in federalism, and even a slight increase in cooperation by the Commonwealth. These factors correlate closely but not precisely with some of the reasons for the improved reputation of federalism in Australia.

First is the ‘Cornwall’ factor. Over the past 90 years, the Commonwealth has gone from picking the low-hanging fruit among state powers to reaching ever higher, and constructing progressively longer and increasingly daunting ladders. It is now clambering around the spindly outer braches of education, health, water, resources and assorted micro-economic reforms, with gains becoming harder, state resistance more desperate, and progress more difficult to demonstrate. There must come a point when even Canberra realises that if it is to drain the last and most stubborn swamps of perceived duplication and inefficiency, it is going to require, even if it does not desire, state cooperation. This will come at a price. Significantly, such recent tendencies as the Commonwealth moving from its traditional position of coercing the states with promised largesse in return for concessions to the almost bizarre position to programs such as the Gonski reforms in school education—where much of the promised funding is to be siphoned from the states themselves—suggests the outer limits of Australian federal fiscal banditry may well have been reached. From here, there is nowhere to go but very, very slightly backwards.

Second, this perception of tough going for limited gains tends to be verified by the vast rafts of federal reform propounded by the Rudd government. At the time of its election, it almost seemed that within the life of the government, Canberra would occupy the commanding hills of health provision, direct education from kindergarten to cloister, and direct the Murray-Darling Basin from the backblocks of Queensland to the SA coast. Five years and thousands of pleas, demands and threats later, Australia remains proudly federally bifurcated on all these issues, notwithstanding increased cooperation in minor matters. Surely, the chequered history of Rudderalism must suggest to his Commonwealth successors, as the statue of Ramses suggested to the poet Shelley, that there are more effective courses to success than grand programs of general subjection.

Finally, if the Gillard government is succeeded by a conservative administration, Australian Tories will have had six years to contemplate the realities of the prodigious batteries of centralised power assembled by Howard. The corporations’ power is not nearly as much fun from a conservative perspective when it is being deployed not for industrial reform but to alleviate climate change and regulate resources. Oppositions, like goldfish, have notoriously short memories, but is too much to hope that the side of Australian politics that supposedly espouses a philosophy of limited federal power might rediscover, in the light of painful experience, a qualified commitment to federalism? Might such a lesson be reinforced by contemplating the mistakes and difficulties of their Labor predecessors in their pursuit of forced rather than cooperative federalism, and the law of diminishing returns that is making the process of centralisation so much less fun than it used to be? Might the ruthless disciplines of surplus budgets finally suggest to a conservative government that it might be worthwhile to return functions to the states, even if it means returning at least some of the inadequate fiscal base that supported them?

Only time, and possibly a healthy dose of reality, will tell.