Centralism by stealth

On 15 May 2008, Brendan Nelson made his Address in Reply to the Budget.

An unreported part of the speech was framed in the nature of a "headland" address, setting out a possible general direction for the Opposition.

One issued raised was the condition of the federation.

He said:

It is very important for every one of us to ask ourselves in this the 21st century: how can we make the Federation work more effectively for our country in the interest of Australians? It will require all of us, in a mature and sober way, to examine the constitutional arrangements and responsibilities of the three tiers of government—who is responsible for what, how the money is raised and then how it is distributed.

He had better hurry, otherwise there will be nothing to worry about. The matter will be settled.

Writing in the Australian on 10 June, Lindsay Tanner said:

Across Australia there is recognition that our federation is a mess. We have this system because of how we started: a collection of separate entities, joined together to form a federation. In the intervening period, technological change and an increasingly global economy have transformed Australia in ways our colonial forebears could not have imagined.

He went on to say:

I no longer think that abolition of the states is the most practical or desirable reform option. But I do want to create a much clearer delineation of the roles and responsibilities of the different levels of government.

The Rudd Government's reform agenda reflects a simple but powerful concept that guides our approach to federalism: "Regulate nationally, deliver services locally."

The Finance Minister finally went on to note that the Council of Australian Government (COAG) was working on no fewer than 27 areas of regulatory reform.

This work occurs in committees and working groups that support COAG.

At its meeting of 26 March 2008, the Council endorsed an implementation plan from its Business Regulation and Competition Workgroup.

It was decided that legislation needs to be "harmonised" (made the same), or a national system created in the following areas:

occupational health and safety, environmental assessment and approvals, payroll tax administration, rail safety legislation, consumer affairs, planning and development approvals, construction, business names, personal property securities, mine safety, wine labelling, director's responsibilities, crude oil and natural gas projects involving more than one jurisdiction and maritime safety for commercial vessels.

The Commonwealth is to take over full regulatory responsibility for trustee companies and mortgage advice, margin lending and lending by non-deposit taking institutions. The possibility of a national authority for mine safety was also mooted.

Other committees that work under COAG are moving to harmonise legislation with the same assiduity.

For instance, the Weekend Australian of 3-4 May 2008 reports that following a meeting of Transport Ministers, it was decided that Australia's truckies will come under one national registration scheme, a reform that Transport Minister Anthony Albenese said:

… is about delivering on the Rudd Labor Government's commitment to modernising our century old federation and building a seamless national economy for the 21st century.

This follows on from the previous Government's attempts to centralise decision making in areas ranging from health to education to industrial relations.

So much "harmonisation" in such a small space of time!

Now, the (few) supporters of a federal system argue that citizens benefit where there is genuine "competitive federalism" –the idea that different jurisdictions will make different rules and regulations and have different levels of taxation, with each jurisdiction ultimately picking up what is "best practice" or face the loss of people and investment.

A similar argument is one holding that States are "incubators of innovation" –a place where different ideas can be tried, with the good ones taken up in the bad ones discarded - and if an idea is a really bad, the entire nation doesn’t have to face the consequences.

According to the Liberal Party platform, this is how Australian federalism should operate.

Alternatively, one can say that Australia is an integrated common market, with people and companies commonly undertaking activities across state borders.

Moreover, Australia exists in a globalised world, with the complication of different rules in different states a reason not to come to Australia.

In this case, there to be only one set of rules (usually encapsulated in legislation) made by one legislative body – in our case, the Australian Parliament.

The states would have the role of (effectively) an English county council, concentrating on service provision based on national standards.

A "seamless" national economy achieved in the manner anticipated by Tanner.

Now, the way the current system works is that when the "governor's club" that is COAG makes the decision to "harmonise" regulation, a working party of public servants broadly determine the contents of legislation.

Their recommendations are then forwarded to a COAG committee or working group, which then passes it to COAG itself, for final endorsement.

If it is constitutionally appropriate for the states to legislate so as to achieve harmonisation, one state will develop and pass model legislation through its parliament with the remaining states or territories subsequently passing legislation that picks up the model legislation.
 
Whilst nominally capable to amend legislation, state parliaments – including those chambers without ALP majorities - have typically accepted the national legislation without batting an eyelid, on the grounds that "COAG decided".

This system can give rise to what can be called a "democracy deficit".

When harmonising up to nine separate systems into one, some laws in force in some states will either be changed or abandoned.

As well, larger players with both ample resources and the knowledge of how the less than transparent COAG process operates can influence the system so that legislative outcomes reflect their interests.

Small businesses and individuals have little if any capacity to influence outcomes whilst state parliaments, controlled as they are by executive members – the people who are ministers and thus part of the COAG club - have effectively dealt themselves out of the legislative scrutiny game.

The pace of Kevin 24/7 is such that many laws will shortly be changed using a system that virtually by-passes critical parliamentary examination.

The ability for anyone other than the largest most sophisticated players to vary or oppose legislation will be lost.

By default, Australia will develop a European Union style of technocratic government.

Tanner appears to support a 2020 summit recommendation for a Federation Commission to (which according to Tanner could be part of the Productivity Commission) to carry out a clean sheet of paper review of the roles and responsibilities of federal, state and local governments in areas of major economic activity.

If that is the Government's policy, they should establish the commission sooner rather than later, so that the structure of the Australian federation, and the responsibilities of each component of it, is clear.

Similarly, the Opposition should now signal whether they still stand by their platform, or rather that they now think it more appropriate for states and territories to be service providers, leaving standards setting to the Australian Parliament.

Both parties owe this to Australian democracy.