Why Australia's states are doomed

A federal system of government is one in which the subnational units are autonomous, meaning that they have certain powers and prerogatives that cannot be taken away by the central government (and, by implication, that they cannot be unilaterally dissolved or amalgamated by the central government). A unitary or "centralist" system is one in which the subnational units, if they exist at all, are not autonomous. Autonomy is the key: a system with non-autonomous subnational units may call itself federal, but in reality its central government holds all the cards.

Thus Australia is a federation of States because the States are autonomous. Similarly, Canada is a federation of Provinces and Switzerland is a federation of Cantons. But the individual Australian States are unitary because the municipal (local) governments only have such powers as are delegated to them by the States and can be dissolved or amalgamated by the States.

If, as some reformers propose, Australia's six States, two major Territories and 900-odd municipalities were replaced by a few dozen self-governing "regions", the resulting system would be a true federation provided that the regions were truly autonomous. Some "regionalist" models do indeed provide for autonomous regions. It is even possible (although not this writer's preference) to create a regional system without changing a word of the present Constitution: the existing Territories or parts thereof could be made autonomous under s.121, while the existing States could split into smaller States under ss.123 and 124, and the new mini-States could, and probably would, refer some of their powers to the Commonwealth under s.51(xxxvii).

Professor Geoffrey de Q. Walker, in his recent article "Ten Advantages of a Federal Constitution" (OLO, May 2001), acknowledges none of this. In his opening paragraph he uncritically contrasts "federalism" with "waiting for an appropriate time in which to abolish our spent State legislatures". In the next paragraph he quietly correlates the States with "constitutionally decentralized government". In the fifth paragraph, where he says that "centralists give federalism the disparaging label ‘states’ rights’", he reinforces the false identity between federalism and the States, and establishes a false dichotomy between centralism and the States whereby his opponents are branded as "centralists" for the remainder of the essay.

Having erected his straw man, Walker ritually knocks it down by expounding ten "advantages of constitutionally decentralised government". Let us re-examine these advantages from a regionalist viewpoint.

1. The right of choice and exit

"A federal system allows citizens to compare political systems and ‘vote with their feet’ by moving to a state they find more congenial," says Walker.

Citizens could also vote with their feet in a regionalist federation. Moreover, the political differences between regions, unlike those between States, would reflect demographic differences between urban and rural areas.

2. The possibility of experiment

Says Walker: "Federalism ... is more conducive to rational progress because it enables the results of different approaches to be compared easily. The results of experience in one's own country are also less easily ignored than evidence from foreign lands."

There is an element of circularity here. If the policy on a certain issue differs from State to State, these differences are indeed harder to ignore than international differences on the same issue. But if the policy is determined centrally, the States do not distract attention from international comparisons. Combining this point with Walker's argument, we conclude that we must have interstate differences because international differences are too easily ignored because of those interstate differences that we had to have.

That said, a larger number of autonomous regions gives more scope for experimentation, on issues within the powers of the regions, than a smaller number of States.

3. Accommodating regional preferences and diversity

"The decentralisation of power under a federal constitution gives a nation the flexibility to accommodate economic and cultural differences," Walker writes, without admitting that the "economic and cultural differences" between States are dwarfed by those between the urban and rural parts of any one State. Accommodation of these differences requires regional governments, not State governments.

4. Participation in government and the countering of elitism

"A federation is inherently more democratic than a unitary system," says Walker, "because there are more levels of government for public opinion to affect." That is true, but note that the comparison is between a federal system and a unitary system, and not between two different federal systems.

Regionalists usually propose that the present three levels of government be reduced to two. There are at least three reasons why fewer levels would not mean less democracy. First, the present three levels would be more accurately described as "two and a bit" because of the lack of autonomy for local governments. Second, overlap between Federal and State responsibilities means that the will of the people expressed at State level can be frustrated at Federal level. Third, complexity is increased by an extra level, and increased further by overlapping responsibilities and lack of autonomy. A more complex system of government is harder for the people to understand and consequently harder for them to influence.

Walker complains that unelected international bodies can impose their will on sovereign nations, but fails to relate this problem to the existence of the States or to federalism in general. If he is suggesting that the present federal system restrains international agencies because policies implemented at State level are beyond the reach of treaties, I deny it, because s.96 of the Constitution allows the Commonwealth to dictate terms to the States by attaching conditions to grants. (While I cannot speak for other regionalists on this point, my preferred constitutional model would do away with s.96 and prevent the circumstances under which I would consider the use of s.96 to be justified under the present system).

"Voice is more effective in small than in large political units – one vote is more likely to be decisive in an electorate of 100 than in an electorate of 1000 or 1 million," says Walker. This is a convincing argument for breaking the States into smaller units. But the units must be big enough to make a difference – it's no use having a voice in a government with no teeth. For the purpose of giving effective voice to the individual voter, the States are definitely too big, while most of the present local governments are arguably too small and certainly too weak. The regional government proposal is an attempt to strike a reasonable compromise.

5. The federal division of powers protects liberty

Walker notes that "The existence of independent state court structures prevents a national government from filling all the courts in the land with judges believed to be its supporters." But it doesn't stop the government of each State from stacking the courts of that State. Such abuses could be prevented by requiring bipartisan parliamentary approval of all judicial appointments. But the same political parties that extol the safeguard of multiple judiciaries would not support bipartisan appointment, because that would take away their opportunity to stack the courts wherever and whenever they happen to hold executive power.

Walker gives a catalogue of Federal assaults on personal liberty, but fails to mention two more serious violations of human rights, namely the failure to compensate home owners whose homes are devalued relative to other homes in consequence of government decisions, and the failure to reimburse the legal costs of persons acquitted of criminal offences. These violations are mostly committed by the States. Walker concludes that Australia "has much to fear from any further concentration of government power," but fails to acknowledge that regionalists would break up the present concentration of power in State capitals.

"In a properly working federation," says Walker, "a national government seeking to implement a uniform policy in an area where it has no constitutional power must learn to proceed by negotiating and seeking consensus, not by diktat, bribery or menaces." Has he forgotten s.96, or is the system that he is defending not a properly working federation?

6. Better supervision of government

"Citizens can exercise more effective control over government officials when everything is on a smaller scale," says Walker. "Rent-seeking is easier in large than in small governments." Again, these are compelling arguments for breaking the States into smaller autonomous units.

7. Stability

"Federations are exceptionally stable," says Walker. Perhaps that's another reason why so many regionalists are federalists.

8. Fail-safe design

Walker submits that federalism makes it harder "for any one group of politicians to ruin the entire economy at once." Or for any one group of voters to rescue the entire economy at once? But again the same arguments apply to a federation of regions.

9. Competition and efficiency in government

Walker complains that government programs tend to be administered so as to create a surplus that can be used in the interests of the administrators, and that this tendency is greater if a government has monopoly power. Presumably this argument applies as much to subnational governments as to national governments, in which case the only remedy is to limit and impede the autonomy of the subnational units. This is the antithesis of all that Walker espouses.

"Small entrepreneurs need simpler and less intrusive government, union structures and taxes, " says Walker. In that case, all business regulations and enterprise-level taxes should be imposed by the same level of government, all industrial awards should be national, and the division of powers between levels of government should be clear-cut. Regionalists have long been aware of these needs.

Walker alleges that the redundancy of 576 state parliamentarians plus their supporting bureaucracies would not be a net saving. To support this claim, he belatedly acknowledges that "Centralists [sic] always suggest replacing the six states with `regions', between 20 and 37 in number." He has not found it convenient to mention the regions before. And nowhere does he find it convenient to mention local governments. Needless to say, the regions are meant to replace not only State governments, but also local governments (or most of them; some regionalists, not including this writer, would allow the largest cities to be further divided into boroughs). The proposal is not to replace half-a-dozen governments with a few dozen, but to replace several hundred with a few dozen.

Walker's international comparisons of government expenditure have more to do with different levels of service, especially in health and education, than with different systems of government. His observation that the current populations of the States are large by comparison with the founding American states is yet another argument for breaking the States into smaller autonomous regions.

10. A competitive edge for the nation

Here Walker suggests that competition between States enhances national competitiveness. He says nothing about competition between autonomous regions.

Prognosis

Looking to the future, Walker endorses the myth that the GST "provides the secure revenue basis the states have long needed and is a step towards more balanced federal-state fiscal relations." In fact the GST revenue is distributed by the Commonwealth on the condition (s.96 again!) that the States abolish several of their own taxes, making the States more dependent on Canberra than ever before. In the same paragraph Walker refers to a national bill of rights. This is gratuitous and irrelevant because such bills can exist in both federal and unitary systems.

When fallacious arguments hold sway, it is usually because they are simpler and more easily reduced to sound-bites than the arguments that refute them. It seems that the defenders of the States do not have this advantage, in which case their only hope is to suppress discussion of the issue. But discussion will continue because so many vested interests, including the press, are burdened with the cost of complying with multiple sets of laws whose subject matter would inevitably be a national prerogative under a regionalist federal system. Regionalism is one issue on which the interests of big business concur with those of the masses, and this happy convergence will consign the States to the dustbin of history.