Wednesday, September 11, 2013

New Senate might reform

The changing political configuration of the Senate could provide a rare opportunity to undertake meaningful structural reform of our increasingly dysfunctional federal system.

The problems affecting Australian federalism are manifold by nature with significant long-term consequences, and are generally recognised as such by most elements of the political spectrum.

Perhaps the most visible manifestation of a failing federal system is the prevalence of administrative overlap and duplication across levels of government, affecting the quality of policies and services in areas such as education, health, transport and welfare services.

Large federal bureaucracies have emerged with little or no service-delivery role, charged with enforcing policy standards and administrative procedures in relation to grants funding to large state bureaucracies.

This trend has not only led to an excessive size of government, with two bureaucracies intervening across different areas of policy, but to the creation of perverse incentives in which federal and state politicians blame each other for poor policies and unsatisfactory service standards.

Greater commonwealth involvement in state areas of responsibility has also diminished state policy autonomy, since more prescriptive policy and service standards are attached to federal grants comprising a growing share of the states' revenue pool.

This phenomenon increasingly deprives regional communities of a means of ensuring their preferences for state public services — and the taxes to pay for them — are being delivered consistently and effectively by state government administrations.

The previous federal government, particularly under the leadership of Kevin Rudd, placed great stock on the need to reform federalism, with particular emphasis on greater co-operation to ameliorate intergovernmental ''blame games''.

However, the Rudd federalism agenda, like many other agendas pursued by the former government, largely floundered over a six-year period.

Initial federal threats to take over public hospital networks were significantly watered down by state resistance, while the Council of Australian Governments process was lumbered with an overly ambitious agenda of regulatory centralism that failed to meet critical milestones across key policy areas.

In his 2009 book, Battlelines, Tony Abbott recognised the extent of our federalism problem, writing that ''increasing commonwealth involvement in areas of governments that were once exclusively the realm of the states means that the federation is broken and does need to be fixed''.

The general solution proposed by Abbott at the time was ''to give the commonwealth legal authority commensurate with its political responsibility'', which could have been interpreted as a call for a further centralisation of power.

It appears Abbott has now considerably softened his stance about a greater federal role in service delivery.

For example, immediately prior to last weekend's election, he said, ''the last thing any sane national leader would want to do is interfere in an area where the states are doing a perfectly competent job''.

Another element of the Coalition's more conciliatory approach to the states came in the form of a commitment to release a white paper on federalism.

The emphasis of the paper would be upon reducing functional overlap and duplication, with recommendations to be taken to the voting public at the 2016 election.

The unexpected changes to the Senate could provide the catalyst for meaningful alignment when it comes to federalism reform.

The Liberal Democrats, with their newly elected NSW senator David Leyonhjelm, have long supported competitive federalism, advocating the assignment of expenditure responsibilities and taxing powers back to the states.

The new Family First senator from South Australia, Bob Day, has long played a role in the Samuel Griffith Society, which is primarily dedicated to restoring the constitutional integrity of Australian federalism.

While the Palmer United Party website is light on detail when it comes to specific policies, its ''national policy'' supports ''a federal system of government and the decentralisation of power, with local decisions being made at the local level''.

It would not be unreasonable to imagine that, for at least the LDP and Family First senators, a desire to reverse the century-long trend of fiscal and regulatory centralism would rate as a high reform priority.

If other crossbench senators are of like mind, the Coalition could secure legislative passage, as required, for any white-paper recommendations that encapsulate shifting responsibilities to lower levels of government.

Many possibilities abound as a result of a Senate composition that has surprised many observers.  Repairing our broken federal system could be one of these, in which a conservative government and some classical liberal crossbenchers work together to restore a more traditional, and rational, assignment of federal and state functions and responsibilities.

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