australia Federations

23 2008 LY amba JUNE | JU y Al y unda o/S t o h AP P AP Australian Premier , left, joins a planning and brainstorming session in April 2008.

Australia’s Commonwealth government ends blame game Window of opportunity opens for co-operative federalism

By Anne Twomey

f it were a horse, you’d put it concerned about the increasing federal In 2007 all the state premiers, through down.” incursions into state areas of responsibil- the council, called for a constitutional This was Queensland ity and the centralist philosophy of the convention to be held in 2008. They L a b o r P re m i e r Pe t e r Liberal Government at that wanted to reform the operation of the “IBeattie’s view of federal time. Howard was defeated in December federation by reconsidering the alloca- system in August 2007. 2007 after 11 years in power. tion of powers and responsibilities Like many other state premiers, he But instead of giving up on federalism, between the different tiers of govern- was in despair over the expansion of leg- the state premiers united and performed ment and revising federal-state financial islative power of the central or reconstructive surgery. They formed the relations. Commonwealth government and the Council for the Australian Federation in Under the Australian Constitution, 40 erosion of state powers allowed by the October 2006 creating a structure for the specific powers are given to the federal High Court of Australia, which rules on states to negotiate with the federal Parliament, with residual powers left to constitutional matters. government, and also achieve harmoni- the states. The expectation was that, by Beattie and his counterparts were also zation of laws where needed. creating a federal government with apparently limited powers, state govern- Anne Twomey is an Australian constitutional lawyer and an Associate Professor of Law at the ments would be left with the lion’s share University of Sydney. She was a member of the Governance Group at the 2020 Summit. of powers. The flaw was that the forumfed.org A ustra l ian Go vernment Federations , D 24 epartment o f

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Aboriginal leader Patrick Dodson (centre) participates in Australia’s 2020 Summit in Canberra on April 20, 2008. He is flanked by two other participants of the Australian thinkfest.

Constitution did not reserve any specific sive. Professor Greg Craven called the Government Association of Queensland, powers for the states. 2006 High Court decision the “constitu- Councillor Paul Bell, made this The consequence of having no speci- tional equivalent of a dirty bomb.” argument: fied powers for the states has been that Emboldened by its wide legislative “Local government does not want to the High Court of Australia has inter- powers and its even greater financial make a claim for more responsibilities – preted the defined federal powers ascendancy over the states, the federal we have more than enough now. Nor do increasingly widely, allowing them to government shifted from a model of co- we want to abolish the states. What coun- expand into the areas that were tradition- operative federalism to one of cils do want is greater certainty and ally left to the states. opportunistic federalism, which it called clarity on who does what to whom, where “aspirational nationalism.” It picked and and when. What we have now is a mov- Diminishing states’ powers chose the state areas in which it inter- ing feast, subject to political whims of the In 2006, the High Court expanded its vened on political or ideological grounds, governments of the day…” interpretation of the federal “corpora- without any systematic approach. For tions power,” effectively giving the federal example, it took control of a single Rudd aims to end ‘blame game’ Parliament power to enact laws that not Tasmanian hospital, while the rest con- But, in November 2007, the political only control the actions of trading and tinued to be run by the state. The landscape changed in Australia with the financial corporations but also their rela- economic inefficiency of such action and election of a new federal government tions with employees, suppliers and the resulting degradation of the federal after 11 years of conservative rule. consumers. Justice Michael Kirby, dis- system caused widespread alarm. Kevin Rudd’s Labor Government was senting, pointed out that the effect of this The Business Council of Australia elected on a policy of restoring co-opera- judgment would be “radically to reduce called for the holding of a constitutional tive federalism and “ending the blame the application of state laws in many convention and federalism reform. Its game.” While the fields that, for more than a century, have president, Michael Chaney, said the obtained a comfortable majority in the been the subject of the states’ principal “gradual, arbitrary decay of the federal House of Representatives, it did not gain governmental activities.” system” was costly to business. The control of the Senate and will need the As most bodies such as universities, Business Council estimated that ineffi- support of the Greens Party and inde- hospitals, schools and even local coun- ciencies in the operation of the federal pendents to pass legislation. At the cils are incorporated, the federal system cost Australians at least $9 billion inter-governmental level, however, it was government’s power to intervene in state Australian ($8.52 billion Canadian) a year. more fortunate. areas such as health and education using Local government bodies were also For the first time,L abor governments the “corporations power” is now exten- concerned. The president of the Local held office nationally and in all states and

forumfed.org territories. This opened up a window of national television that “Australian tives for inefficiency. The federal opportunity for real reform on a co-oper- federalism must be fixed.” He has not yet government has agreed to change the ative basis. It also changed the dynamic responded in detail to the summit’s way these grants operate, focusing on between federal and state governments. recommendations. outcomes rather than inputs, and pro- The proposal for a constitutional conven- Since the election of the Rudd viding incentives for efficiency. tion had been a state reaction to Government, the main forum for federal- An intergovernmental agreement on incursions by a hostile federal govern- ism reform has been the Council of federal-state financial relations is being ment. Whether the states continue to Australian Governments (comprising the negotiated and is expected to come into pursue this proposal after the recent fed- prime minister and all state premiers). effect at the end of 2008. eral election of a Labor government The Council has identified seven areas remains to be seen. requiring reform: health and aging, pro- Achieving reform The Rudd Government called a “2020 ductivity, climate change and water, Much can be achieved in federalism Summit” on April 19-20, 2008, at which infrastructure, business regulation and reform in Australia without undertaking 1,002 Australians, chosen for their exper- competition, housing, and indigenous formal constitutional amendment. Federations tise, were asked to develop ideas and affairs. It has established working groups Where the federal government is lacking strategies for Australia’s long-term devel- of officials, overseen by federal and state in power, states can refer matters within 25 opment in 10 different fields, including ministers, in each of these areas, and their jurisdiction to it under an existing the future of Australia’s governance. The required them to deliver implementa- constitutional mechanism. Where mat- Governance Group at the summit rec- tion plans. The Council will meet more ters should be returned to state control, ommended holding a plebiscite on often than previously and will actively the federal government could simply 2008 whether Australia should become a push reforms. vacate the field by choosing not to legis- LY republic, adopting a bill of rights or a late on the subject and not placing policy charter of rights, including recognition of Council plays key role conditions on its funding. Federal-state

indigenous Australians in the preamble In March 2008, the Council agreed on financial arrangements could also be JUNE | JU to the Constitution and increasing civic reforms to “close the gap on indigenous readjusted in a manner that ensures the participation in government. disadvantage.” These will focus on halv- states have adequate sources of funding, ing indigenous disadvantage in the field but must also take full responsibility for Fixing Australian federalism of employment. It also announced the manner in which they spend those The Governance Group also made two actions to improve the lives of indige- funds. major recommendations concerning the nous Australians in terms of health, The benefit of constitutional reform, federal system. First, it recommended a dental services, housing and water sup- however, is that it will last beyond any review of the allocation of powers and ply. The Council’s Indigenous Reform short-term political consensus. The functions across all levels of governance. Working Group has been instructed to problem is that it is difficult to achieve. This was to be achieved by a three-stage prepare sustainable reform proposals on Constitutional amendments in Australia process: an expert commission which early childhood development, remote must be approved in a referendum by a would conduct the necessary research service delivery, economic participation, majority of voters overall, and a majority and analysis and prepare proposals; a active welfare – where the receipt of ben- of voters in a majority of states. Only constitutional convention involving the efits is conditional on the participation in eight out of 44 referenda to amend the broader public which would deliberate assistance programs – and security from Australian Constitution have succeeded. on those proposals; and implementation violence for indigenous parents and chil- While many reasons have been given for of the convention’s recommendations dren. One of the problems faced by this failure, one is that only the federal through inter-governmental co-opera- indigenous Australians has been the lack Parliament can initiate a referendum, tion or a referendum. Its second of co-ordination of federal and state pro- leading to public suspicions that referen- recommendation was to establish an grams and an absence of long-term dum proposals are about aggrandizing ongoing commission that would register planning. federal power at the expense of the states intergovernmental agreements, monitor The Council also agreed on revised and the people. their implementation and assist in federal-state funding arrangements. One Reforming federalism in Australia is resolving intergovernmental disputes. of the main causes of duplication and no easy task, but at least there now is a The Economy Group at the Summit inefficiency in the Australian federal sys- will to set about doing this. Whether the also recommended the establishment of tem has been the use of tied grants by the means chosen is a constitutional con- a Federation Commission, although it federal government. States were given vention or co-operative reform of specific was to have a stronger policy role than funding for schools or hospitals only if areas of overlapping jurisdiction, the the governance group recommended. they met specific policy and accountabil- improvement of the operation of the fed- This commission would also be the vehi- ity conditions. This not only allowed the eral system will be beneficial for all cle for revising the allocation of powers federal government to intervene in areas Australians. and functions between the three tiers of of state policy, but frequently resulted in government. the over-funding of some areas and When the Prime Minister received the under-funding of others, excessive levels summit’s interim report, he stated on of administration and perverse incen- forumfed.org