We need strengthened national and local governments... not states!

Of the $33 billion in taxation collected by the states and territories in the year ending June 2001, over $9.5 billion was payroll tax, nearly $5.3 billion was stamp duty, and over $3.5 billion was gambling tax. So state and territory governments rely heavily upon taxes which discourage employment, trade and commerce, and at least passively encourage gambling.

The year ending June 2001 saw local governments (excluding the ACT) account for just 6 per cent of all government spending in Australia and 3 per cent of all tax revenues collected. Local government responsibilities vary across the six states and the Northern Territory but typically include:

• maintenance of roads, footpaths, parks and gardens;
• town planning and building regulations;
• garbage collection;
• council rates collection;
• infant welfare centres;
• meals on wheels;
• public libraries.

Excluding Australia itself, only eight countries in the world are larger in land area than Western Australia, and only 15 larger than Queensland. New South Wales has nearly the population of Switzerland spread across an area larger than Switzerland, Germany, Austria and Italy combined.

Furthermore, whereas Australia's population at the time of federation in 1901 was just 3.7 million, nearly 7 million Australians now live outside the capital cities alone, and nearly 4 million Australians live within 100 km of a state or territory boundary.

So our local governments – particularly outside the capitals – are especially heavily relied upon to address needs and provide services which state and Northern Territory governments are simply too large and too distant to provide. Yet Australian local governments are starved of constitutional and financial powers and resources to an extent unmatched in the democratic world, accounting for, as mentioned earlier, just 6 per cent of total government spending. The corresponding figures in other federations include 25 per cent in the United States, 21 per cent in Switzerland and 18 per cent in Canada.

A 1997 comparative study of 26 OECD countries, titled 'Managing Across Levels of Government' (refer http://www1.oecd.org/puma/malg/malg97/toc.htm), describes Australia's situation as follows:

The states are among the most powerful intermediate governments in the world because of the breadth of their functions and their substantial role in service delivery (in large part a function of the centralisation at the sub-national level, which occurs at the expense of local government).

So whereas advocates of federal systems of government say that federation is supposed to bring government close to the people, federation Australian style keeps government and democracy further from its people than in any other comparable federation.

Our system suffers from "duplicated centralism" because of the extent to which the eight State and Territory governments duplicate the work of one another and of the Commonwealth. Also, federal, state and the Northern Territory governments alike exercise centralised dominance over the tier of government beneath them (the ACT again being the exception here). Australian state governments in particular are almost certainly the most centralised sovereign governments in the democratic world.

So to what extent does duplicated centralism harm Australia?

Challenges and Costs

The salinity, Murray-Darling and rural crises; corporate and market failures in the health care, aviation, telecommunications and insurance industries ... these critical realities all draw urgent attention to the questions at hand.