Cost-shifting, blame-shifting and profligacy

Expanding local governments as part of a package to get rid of state governments is enormously attractive. Beefed up local/regional governments could efficiently take on activities (such as policing and fire-fighting) while being more responsive to local customers than remote state governments can be. These activities are routinely performed by local governments overseas.

Howard's claim that ratepayers should be able to vote on amalgamations is silly. If ratepayers were fully covering their costs, this would be entirely reasonable. But the Queensland Government provides more funding to its local governments than any other state. A state government should not be required to massively subsidise inefficient councils simply because the beneficiaries of those subsidies want them to.

Our system's failings are obvious for all of us to see. A 2005 survey of NSW citizens led by Griffith University's A.J. Brown demonstrated that many citizens want serious reform. Only 24.9 per cent of respondents had confidence in state governments, 40.9 per cent had faith in the federal government and 34.2 per cent had confidence in local government. Almost half (47.4 per cent) nominated their preference for a two-tier federal/regional system; only 12.5 per cent favoured the status quo. Tellingly, 61.6 per cent of state public servants - who know best the downsides of state governments - preferred a two-tier system.

Even politicians recognise that states are anachronisms. State abolition was Labor policy for decades. Bob Hawke advocated it before his election to parliament and after he was deposed as prime minister - but did nothing about it while in power. Howard said in May that "if we started the country again, that (no states) is what people would want. But I am not about to embark on a constitutional campaign to get rid of state governments, let me assure you of that". Pity! Why not?

True, it would require a referendum to approve constitutional change. Referenda are not easy to win. But the main reason why any federal government won't move to abolish states is the electoral risk involved. A move to do so would cop the same flak that Beattie is copping over council mergers. Beattie said recently: "I've never seen a group of politicians losing their jobs ever cop it on the chin. They scratch and bite of course they're going to organise campaigns." Imagine what state premiers would do if their jobs were threatened!

Howard recently called for us all to become "aspirational nationalists". Probably by design, no one has been able to fathom what he meant by that. He claimed that the debate over federal-state relations has focused too much on the roles of each level of government, correctly noting that role definition is "not an end in itself". But he was only half-right in saying we should "focus on outcomes, not systems".

Outcomes do matter, but realising the huge potential cost savings and service improvements is impossible without comprehensive reform. Otherwise, we're just fiddling at the edges. The cumulative effect of these fiddles might wipe out state governments in the very long run. But, to paraphrase Keynes, "we'll all be dead by then".