Would Kevin Rudd deliver two-tier government?

It is refreshing that the new ALP Opposition leader, Kevin Rudd has already announced that the federal structure presents serious public management problems for Australia, but would he be bold enough to do away with federation?

This is no longer a question of piecemeal tinkering, ending up with some type of new federalism - a band-aid type of solution. The answer, surely, is to move rapidly to a two-tier structure: a national government and stronger local government aided by the Regional Organisation of Councils that, in part, is already in place. This could be described as the mezzanine layer of governance, indirectly elected by and responsible to local government.

State governments in metropolitan areas should be limited to city government only, no longer having responsibilities in rural and regional areas of Australia.

It is not just the huge cost savings that result from such a re-organisation but federal-state politicking and buck-passing will no longer frustrate massive national problems.

Earlier statements this year by the federal Treasurer Peter Costello, that state governments had become mere “branch offices” of the federal government, are close to the truth.

After the amicable July 2006 COAG meeting with the ALP state premiers John Howard claimed that co-operative federalism was working. His views on the need for greater national control over many public policy areas have been well documented.

At the subsequent premiers’ conference, addressing a non-controversial and limited agenda, the ALP Premiers expressed the wish to form a Council of States based on the Canadian model which they had studied there at a joint conference in April, 2006.

These are conservative ambitions at least partly aimed at maintaining the federal status quo and, especially, protecting the jobs and careers of hundreds of state politicians and public servants. Canada is NOT a federation but the provinces do have considerable autonomy. If that model shows anything it is that to have some autonomy as provinces a federal constitution is not needed.

What Australia needs is not a new type of quasi federalism but a unitary state that is effectively decentralised. This cannot be achieved by piecemeal tinkering. It requires a daring strategic approach with a clear vision.

The recent decision by the High Court that the new WorkChoices legislation is constitutional, and that the Corporations Power could be used for the IR legislation, has created further prospects for the centralisation and undermining of state powers.

It is of course one further step along the long road of diminishing state powers, which has been competently surveyed, in a recent Parliamentary research paper by Bennett (2006).

When conservative leaders are talking about stronger national government an interesting new dimension in this debate has arrived. The ALP should not shy away from that debate. It argues that the underlying objectives of the Coalition are unacceptable and that the federal framework is the only barrier now that frustrates their implementation. Sure, but this does not preclude the need for a new constitutional framework.

It is heartening that University of New South Wales Law Professor George Williams has set his sights on getting into Parliament as an ALP member because his views on this issue are encouragingly forward looking. Williams realises that the Australian Constitution essentially needs to be rewritten. It is essential for its survival that the ALP embraces this view.

As to government structure, basically, a forward-looking choice here is between a two-tier national government and a number of fairly autonomous regions, on the one hand, OR a national government plus a more developed local government level, both directly elected, on the other hand.

With the first option the number of such regions that have been proposed vary from 30 to 100. In addition there are some who argue, most unconvincingly I would suggest, that the existing Constitution could be used to create more states. Apart from the fact that this has proved to be highly impractical, and for over 100 years impossible, if successful it would greatly compound and multiply the serious problems that the existing system is saddled with already.

Conservative support from stronger national powers has covered many public policy areas in recent years. The principal ones are health, education (primary, secondary, TAFE, VET and tertiary), taxation, industrial relations, transport, environment and power.

There are several other others, less often in the news: control over ports, national scurity, decentralisation, taxation, registration of names and licences, law and justice, and control over airports.

In a speech to the Young Liberals’ conference early in 2005 Tony Abbott said, “federalism was not working”. He pushed for federal control over hospitals because, he claimed, “the states were wasteful and inclined towards socialism”. In March, 2005 PM Howard, said:

If we were starting Australia all over again, I wouldn't support having the existing state structure, I would actually support having a national government, and perhaps a series of regional governments having the power of, say, the Brisbane City Council.

In the health area a real brawl raged with both New South Wales and Queensland for months. There is a strange mix of responsibilities here: the federal government runs Medicare, the Pharmaceutical Benefits Scheme and the bulk of aged care. But the states run hospitals. Rudd has indicated he favours the transfer of hospitals to the federal jurisdiction.

Strengthening local government in a new two-tier system

The major concerns for local government (LG) have been lack of funding and status. Only recently we saw on TV the plight of the large Blue Mountains Shire unable to fulfil the reasonable demands of its ratepayers due to lack of money.

Local government has always been the Cinderella of the three-tier system of government. It is an appendix of the state governments which themselves are under stress. Why should it continue to be like that? There is much evidence that the Australian people favour a strengthening LG. LG seminar sessions in the lead up to the Constitutional Convention (1998) indicated strongly that the people want LG recognised in the Constitution.

Cranny (2006), a governance officer with Blacktown City Council, has suggested that there should be a federal Local Government Act now that the High Court’s ruling on WorkChoices legislation has made this possible. All parties in the federal Parliament recognise the importance of LG nationally.

The position I put here favours the maintenance of LG in regional and rural areas, with expanded functions for some, powers delegated directly from the national government, and particularly, much stronger financial status and independence.

There should be regions, in part based on the Voluntary Regional Organisations (or Regional Organisation of Councils) grafted on and created by LG, which could be described as mezzanine regions. In addition, Australia needs city governments, for the larger cities only, with jurisdiction for the whole of the urban areas in question.

Such governments should be elected at the same time as all local council elections are held nationally. Such reforms will not only strengthen both the national government and LG but would end the cumbersome, dysfunctional centralisation, which has been a growing problem of the states ever since federation.

The mezzanine concept defined

“Mezzanine floor level” basically means “in-between” two normal levels, usually between first and second floors and more often than not, of a two-story building. This is a useful analogy with levels of political units because of what actually happens on such floors and how the organisation and the public view them. Mezzanine floors usually house support units, not very visible to the public, customers or clients although they are usually quite important, indeed essential to the proper functions of the organisation.

The failure of regional development within the existing structures

In our existing political system structure and existing economic system decentralisation and regional development, from the 1940s onwards, has been mostly unsuccessful. The capacity by the states to deliver on adopted policies to achieve that end was never strong and so, understandably, some regions desired to become states themselves, like New England in the 1960s. The Constitution provides for this in theory.

If this option had worked effectively over the last 100 years a quite different situation may have emerged in Australia. However, the de-population of rural Australia continues. Effective deconcentration of population as well as regional development have not been assisted by the non-creation of new states. That constitutional provision has demonstrably failed.

Attempts by Labour and Coalition federal governments over the last 15 years to boost regional development within the existing political framework, the three-tier system, have also nearly all been failures. That much was candidly admitted in the Report by the House of Representatives Standing Committee on Primary Industries and Regional Services (2000) Time running Out - Shaping Regional Australia’s Future.

The report covered many areas but acknowledged the reduction of services in nearly all-regional areas and recommended that this had to stop. Competition Policy got the blame for much of the decline in services, rightly so, and the report recommended “a new focus for investment in regional Australia. Failing that we face the danger of Australia being divided into ‘two nations’.” The 92 recommendations were quite far-reaching however most were quickly rejected by the federal government, which described them as too costly or unrealistic.

The Coalition also came up with the Solutions for Regional Australia Program (from October 2002) to encourage local and regional solutions and ideas. These schemes are run “by the community, for the community” providing grants from $1,000 to $500,000.

While some communities may do well out of this it would seem that such programs are born out of desperation and lack of real commitment to regional development. It smacks of piecemeal tinkering, opportunism and lack of strategic planning. This is not to say that individuals may not have good ideas for regional development, such as, for example, the “dream” of Richard Pratt to replace open irrigation channels with a (covered) piped system to avoid evaporation. But even Pratt’s millions may not be enough to pull this off.

Therefore, strengthening the LG level combined with regional development are desirable objectives and the two need to be linked. It is the clusters of LG councils, where commonality of regional interests has already been identified for some considerable time. These should and do form the core of regional activity.

Regions in this context are territorial areas grafted on to Local Government clusters, not lines on a map or essentially primarily bio-diverse regions, so designated for environmental commonalities. They are the result of the needs of people and are, in the main, voluntarily created by LG clusters, not by a higher authority. It allows for LG functions to be undertaken jointly and financed jointly. Economies of scale are thereby achieved.

The mezzanine concept views regions as adjuncts to LG, which itself should be the second tier in a new constitutional organisation for Australia. However, for the Regional Organisation of Councils to flourish LG not only needs to be recognised in a new constitutional arrangement but strengthened. The strengthening should be in the areas of finance, organisation, powers and qualifications of personnel. Decentralisation and deconcentration of capital city populations can only be encouraged by the abolition of states and the fostering of a new, strong LG culture in Australia.