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Research Brief no. 4 2006–07
The politics of the Australian federal system
Scott Bennett
Politics and Public Administration Section
1 December 2006
Contents
Executive summary
Introduction—federalism’s structural difficulties
The Australian model
The undermining of the Founders’ design
Party politics
Perspective
Commonwealth financial dominance—Section 96
Grants Commission
Income tax
Goods and Services Tax
Tied grants
The High Court
Some governments have pushed harder than others
The Whitlam Government
The Howard Government
Societal change
Australians expect government to do more—and in more
areas
Internal migration
The growth of cities
The changing needs of business
International events
Where the system retains value
Co-operation
Local decision-making
Experimentation
Where the system falls short
Inequality
Living on a border
Too much bureaucracy?
Infrastructure development
The weakness of local government
The avoidance of responsibility
Where to from here?
A rigid written Constitution
Abolition of the states?
A re-allocation of powers?
The states as ‘service deliverers’?
Last words
Parliamentary Library papers on Australian federalism
Endnotes
Executive summary
The Australian Constitution established a federal nation, where powers
were to be shared by the national (Commonwealth) government and the six
member states. The constitution-writers were generally pleased with their
efforts in creating a federal system in which the states were to be significant
players.
Optimistic words about the division of power in the Australian federation
have not been borne out. Many factors have worked to weaken the federal
structure:
- government perspectives have often worked to boost national government
power
- the national government has increasingly controlled the national purse-strings
- states have become increasingly dependent on grants from the Commonwealth
- international events have tended to give more power to the national
government
- the Australian community has tended to look increasingly to the national
government for assistance in many matters formerly the sole preserve
of the states
- High Court decisions have tended to increase Commonwealth power,
and
- Commonwealth governments have tended to focus on their own needs,
policies and preferences before those of the states or territories,
with an implicit assumption that the national view is the one that should
be preferred in times of debate and argument.
Changes in society have also had an impact on the federal system:
- Australians have raised their expectations of what they can gain from
government
- the Commonwealth is increasingly seen as most likely to see that people’s
needs are met
- internal migration has created a frustration with different laws
and regulations in each state
- the development of large national businesses has been affected by
the lack of a true common market, and
- the great increase in the size of cities has shown weaknesses in
the system.
Such factors have all increased the level of criticism directed at the
federal system.
There is a great deal of valuable cooperation between governments, as
well as a large amount of local decision-making. Despite this, many criticise
Australia’s governmental arrangements as no longer relevant for effective
government:
- they help create and maintain inequality among citizens
- they create difficulties for people living on state borders
- they are heavily encrusted with bureaucracy
- they hinder infrastructure development
- they maintain a disappointing weakness in local government, and
- they produce a large cost associated with duplication and overlap
of services.
What might be done to remedy these problems? Some call for the abolition
of the federal system, others speak of re-allocating government powers,
while another view is that the Commonwealth should take over all policy-making,
with the states as service-deliverers.
There is a general consensus, therefore, that the Australian federal
system does not work as well as it might, though it is also clear that
the system has generally worked satisfactorily in handling changed needs
in Australian society. In the aftermath of the High Court’s Workchoices
judgment, the question for government is what, if anything, should be
done to enhance its performance and its reputation?
Federalism is a 100 year old structure. It’s like a 100
year old house where the wiring hasn’t been redone, with a copper, not
a Fisher & Paykel, in the laundry, and an earth closet out the back.
The fabric’s sound – but, boy, could the place be made more liveable.
More efficient. That’s our federation.(1)
……….
The key achievement of the American Founding Fathers was their success
in creating a political system which met the political needs of the American
colonies. The American federal constitution created in 1787 succeeded
in achieving a balance between the need for a united nation, combined
with a significant degree of sub-national diversity. Governmental power
was divided in three ways: some powers were the responsibility of the
national legislature, some remained the responsibility of the state legislatures,
and some were shared (‘concurrent’).
In particular, the American Founders sought to ensure that the state
governments had meaningful powers and were not governmentally subordinate
to the national government. This remains an important consideration in
the evaluation of whether a political system is correctly defined as ‘federal’
or not:
In laying down that the autonomy of the parts of a federal
state must be considerable in extent, I mean that we should hardly call
a state federal merely because the independence of local governments
in certain minor matters was guaranteed by the constitution.(2)
Such is the typical arrangement achieved by the writers of all successful
federal constitutions. As in the Australian case, this division of governmental
power can be crucial to the perceived success of the constitution-writing
process.
A problem, though, is that constitutional powers can be affected by time
and changing circumstances. A power of apparent significance at the time
of constitution-writing—the Australian states’ power to make money from
the sale of land, for instance—can wane over time. Another ‘power’ that
is not on the discussion table when a constitution is written—the need
to protect the natural environment, for example—can become very significant,
and may consequently be fought over by the two levels of government. Constitution-writers
can also err in what they choose to include or exclude—the omission of
local government from any direct reference in the Australian Constitution
is considered by many to be a major failing in the Australian Founders’
design. Fifty years ago, Professor Rufus Davis of the University of Queensland
summed up the difficulties of federal constitutional design when he pointed
out that:
… it is no more possible to predicate the precise motives,
postulates, and understandings, or predict the life which will ensue
from the choice of this form of union than one can predicate the motives
which lead to marriage or to predict the relationship which will ensue
from the former in which the union is legally consummated. It is scarcely
conceivable that all parties to the federal bargain at all times and
in all places seek the same things, in the same proportions, for the
same reasons; or that the intensity of the preferences among those who
seek just that much more strength for the national government, or for
the regions, should be the same ... At best the federal compact can
only be a formalised transaction of a moment in the history of a particular
community.(3)
All of which means that the boundaries drawn around powers are not immutable,
for they can be pulled, stretched, jumped across, or ignored, by governments
responding to changing circumstances. Such circumstances can include times
of national danger, the discovery of unanticipated flaws in constitutional
design, changing policy priorities, or changes in the political arena.
It is probably impossible to write a federal constitution in such a way
as to anticipate all eventualities. To this extent, therefore, federal
constitution-writers will inevitably fail in their task, for their constitution
will be unable to maintain the same balance between central and territorial
governments that was achieved when the new constitution came into force.
In their attempt to divide powers, constitution-writers also weaken the
structure of what they have created by their probably-inevitable failure
to allocate the powers into separate, air-tight, jurisdictional compartments.
Quite often, indeed, there will be the provision of concurrent powers,
referred to earlier, which ensures constitutional overlap—40 in the Australian
case, for instance, and 47 in the Indian Constitution.
The overlapping of powers can also arise if there is any sort of textual
ambiguity in the words of a constitution. In the Australian case, s. 51
refers to the Parliament having power ‘to make laws for the peace, order
and good government of the Commonwealth with respect to’ the various specified
areas of government administration. Professor Cheryl Saunders of University
of Melbourne has noted that the High Court’s treatment of the words, ‘with
respect to’ has broadened each of the powers fractionally, ‘by attaching
an “incidental” power to them to do anything that is necessary to make
the main power fully effective’.(4) In all federal systems
the political result is:
… an assertive federal center [sic] which typically enlarges
its circumscribed powers yet manages to stay within the constitutional
framework.(5)
The consequence is that the constitutional core that is s. 51 is being
continually expanded to gradually increase central government power. The
High Court’s 2006 WorkChoices case is simply the latest in such an expansion
(see below p. 15).
The supposed equality of the components in a federal state also is undermined
by the existence of ‘supremacy’ provisions favouring the centre, such
as Article VI in the US Constitution, or s. 109 in the Australian Constitution:
When a law of a state is inconsistent with a law of the
Commonwealth, the latter shall prevail, and the former shall, to the
extent of the inconsistency, be invalid.
There is irony in the fact that the writers of federal constitutions—who
are typically very much aware of regional fears—are likely to include
words in their constitution that have ‘a unitary and centralizing potential’
in what they are planning will be a decentralised governmental structure.(6)
Over time, as our understanding of federal nations has grown, we have
seen an increasing frequency and range of central intervention in the
supposedly separate and protected powers of territorial governments, irrespective
of how the constitution was constructed.
This Parliamentary Library Research Brief illustrates how this analysis
of federal systems fits the Australian case. Within ten years of the creation
of the Australian nation the financial aspects of the federal system had
been undermined, something that has continued to the present day. With
the Constitution now over 100 years old, the paper asks: where does it
retain value and where does it fall short of providing Australia with
governmental outcomes suitable to our times? The paper also asks what,
(if anything) does the Australian nation now need to do to improve our
constitutional structure and hence, the quality of governmental outcomes?
It must be noted that all that can be done here is to give a brief overview
of what is a vast literature on Australian federalism. Parliamentary Library
studies on particular aspects of the federal system are referred to on
pp. 29–30. Members and Senators interested in other federal issues can
seek more analysis from the Parliamentary Library.
The Australian Constitution established a federal nation, where powers
were to be shared by the national (Commonwealth) government and six member
states—the former British colonies. Colonial parliaments and laws were
protected, though certain powers were lost to the national government.
The Australian Founders sought to protect as many state powers as possible,
for they believed that this was the only type of government that had a
chance of being accepted by voters. In all colonies there was concern
over the possible loss of colonial identity in a large, anonymous union.
The Founders’ desire to preserve a significant state presence can be
seen in a number of places, including:
- the establishment of the Senate, seen by the Constitution-writers
as the house where the states’ existence was recognised in the national
parliament—many of the Founders preferred the name ‘states’ Assembly’
or ‘states’ House’, to make the place of the national upper house in
the federal system perfectly clear(7)
- equal numbers for each ‘Original State’ in the Senate
- the fact that the national Parliament’s powers are specified in the
Constitution, with the residue belonging to the states
- the fact that this residue is considerable, indicating that the Founders
wished to have important and powerful regional governments within the
new political system
- the considerable work put into Chapter IV of the Constitution (Finance
and Trade) in an effort to guarantee the continued good financial health
of the states after the achievement of nationhood
- the insertion of sections 106 (state constitutions), 107 (state parliaments)
and 108 (state laws) designed to guarantee the continued existence of
each part of the state structure—and hence, of the states themselves,
and
- the requirement that amendments to the Constitution affecting a state’s
representation, Parliament, the geographical size of a state or ‘in
any manner affecting provisions of the Constitution in relation thereto’,
cannot become law without the support of a majority of voters in the
state being so affected.
Overall, the constitution-writers were pleased with their efforts to
create a federal system in which there was a strong element of concurrent
power. As a South Australian delegate put it:
We have created an instrument
of partnership between us which, I believe, while it secures the independence
of the several states, will provide for the joint control of certain
matters, at the same time as it also leaves free and complete self-government
on all matters not committed to the central authority. And this, it
seems to me, is what we should have done — to provide that national
questions should be federalized, and the local questions should be left
to local self-government.(8)
The hopes of the Founders were quickly shown to be constitutionally naïve,
for, whether by design or force of circumstance, the national government
soon began to undermine and distort the new constitutional arrangements.
The states also played their part in this. Such undermining and distortion
have continued to the present day.
The Founders probably had no idea of how much party politics would colour
the attitude of government and politicians to federalism. In particular,
the Australian Labor Party has always had difficulties with the federal
system. At the time of Federation many in the labour movement opposed
the Commonwealth Bill due to their concern that a federal system would
weaken the struggle for social welfare. There was also opposition to the
‘undemocratic’ provision of equal Senate representation for states, and
a belief that the Senate was too powerful—in fact, some opposed the creation
of a national upper house at all.(9) Since then, Labor Prime
Ministers have worked to lessen the power of the states, as in the case
of John Curtin and Ben Chifley’s activity in excluding the states from
the income taxation field (see below, p. 12). Such attitudes have tended
to be sharpened when state governments have been led by party opponents.
The story has been similar for the major non-Labor parties. Despite being
generally more sympathetic to the federal system than their major opponents,
party politics has always seemed likely to influence non-Labor attitudes
to Commonwealth-state relations. A famous example occurred at the 1970
Premiers’ Conference chaired by Liberal Prime Minister John Gorton, where
South Australia’s Don Dunstan was the sole Labor government leader. When
South Australia received markedly lower Commonwealth grants than the other
states, Dunstan claimed that the ‘inescapable conclusion’ was that party
politics had ‘influenced the treatment of a particular state’.(10)
In October 1974, National Premier Joh Bjelke-Petersen, announced an early
Queensland election so that voters could ‘register their views on the
grave problems facing the state’ due to ‘the whittling away of state rights
and the denigration of our constitutional system’ by the Whitlam Government.(11)
Currently, observers have speculated that the relationship between the
Howard Government and the state and territory leaders has been influenced
by the fact that the regional governments currently are all Labor governments—described
by a Howard Government minister as acting as ‘de facto members of the
Federal Opposition’.(12) According to John Summers of Flinders
University, the current Commonwealth Government’s willingness to ‘take
on’ the other governments can be explained by partisan factors.(13)
Although the constitution-writers saw each level of government as having
a role to fill, hopefully for all time, their optimistic words about the
division of power in a federal state have not been borne out. An important,
if not always appreciated, point is the part that perspective has played
in shaping the different levels of government in the years since 1901.
Commonwealth governments have tended to focus on their own needs, policies
and preferences before those of the states or territories, with an implicit
assumption that the national view is the one that should be preferred
in times of debate and argument. State concerns have often been pushed
aside. Similarly, state and territory governments have seen policy through
the prism of their regional needs, often seemingly unable to see that
there might be a need greater than the satisfaction of their own community.
Such attitudes, whether central or regional, can override political party
policies and prejudices. A party may well have long-standing policies
on the future of Australian federalism, but very often the views of the
federal system held by some of the party’s members tend to be affected
by where the particular division or branch of the party sits in the system.
For example, state Labor governments and oppositions tend to be more protective
of the federal system than Commonwealth Labor governments. Commonwealth
Liberal governments have tended to distort the federal arrangements rather
more than their pro-federalism rhetoric has suggested would be the case.
Former South Australian Liberal Premier, and later member of both houses
of the Commonwealth Parliament, Steele Hall, has illustrated the impact
of perspective upon one political player’s view of the political system:
… sitting in a Federal House it’s clear that Australia
has to work as a country, not as a group of separate units. You tend
to get a lower opinion of state administrations when you see Canberra
at work.(14)
As an Opposition backbencher in the House of Representatives, Tony Abbott
(NSW, Lib) once described the Australian federal system as ‘perfectly
good’, provided each tier took care of ‘its own business’.(15)
However, after nearly a decade in office as a Howard Government minister,
he proposed that the Commonwealth directly fund schools, hospitals and
service providers, traditionally state responsibilities, ‘rather than
use the states as intermediaries’.(16) Hall’s and Abbott’s
comments are also a reminder that some key politicians can shape the ‘tenor
and structure’ of the federal system depending on their views of it. Prime
Minister Hawke and Premiers Bannon (SA, ALP) and Greiner (NSW, Lib) were
more committed to inter-governmental cooperation than were Prime Ministers
Whitlam (ALP) and Keating (ALP) and Premier Kennett (Vic, Lib), all of
whom were critical of Australia’s federal structure.(17)
The impact of experience upon a politician’s perspective can be seen
in the case of Prime Minister Robert Menzies, Liberal defender of decentralised
power, but also a politician who could see merits in the financial dominance
of the Commonwealth. Although he acknowledged that it suited him politically
at times to protect the federal system from the Labor Party,(18)
he worried that the federal system was being manipulated without due regard
to the basic need of creating a nation. Menzies believed that it was important:
… to abandon, not the principles of federalism, but that
excessive emphasis on purely local rights which is proving such an impediment
to the creation of a truly national sentiment and pride.(19)
Despite the optimism of the Constitution’s writers, the claims of the
Commonwealth government and the claims of state governments have often
clashed since 1901. Invariably, such clashes have been about which government,
regional or national, best expressed the people’s will, seemingly with
little reference to the quality or relevance of particular policies. Quite
often issues can be resolved co-operatively (see below pp. 20–22). Far
more typically, ‘resolution’ is a matter of the Commonwealth prevailing
in the argument, irrespective of the views of any particular states: ‘the
federal government often seems more interested in getting its own way
than in making federalism work better’.(20) National perspectives
held by Commonwealth governments are inherently likely to undermine governmental
arrangements that restrict national power. Arguments between the Commonwealth
and the states not only involve policy issues, but they are also about
which values will prevail in the marketplace of political ideas. It has
been said that there will never be final answers to these national-regional
questions and that the tension inherent in federalism will never disappear,
but that assumes that the federal system will remain intact.
A great many of the changes in Australian federalism have flowed from
the failure of the Finance clauses (Chapter IV) of the Constitution to
avoid the increasing centralisation of financial power. Within a few years
of Federation, the Commonwealth was finding the financial arrangements
irksome, due to the need to make unexpectedly large expenditures of its
own in such areas as defence, public works and social services.(21)
It was therefore soon working to undermine the government finance guarantees.
The states were powerless to resist. As early as 1902 the Commonwealth
Attorney-General, Alfred Deakin, had made his oft-quoted claim that the
states were ‘legally free, but financially bound to the chariot wheels
of Central Government’.(22) By the end of the first decade,
when sections 87 (payment of customs and excise takings to the states)
and 94 (distribution of surplus Commonwealth funds to the states) had
been allowed to fall into disuse, the pattern of Commonwealth financial
dominance and relative state penury had been established. This has remained
at the centre of Commonwealth-state relations ever since. As noted by
Menzies, it was one of:
… the centralizing, or centripetal, developments in our
… federal Constitution. But I … confess that I can see no way by which
it could have been avoided …(23)
Commonwealth and state governments soon came to see there was a need
to deal with the collapse of the constitutional financial arrangements.
A constitutional means was at hand in the form of s. 96:
… the Parliament may grant financial assistance to any
state on such terms and conditions as the Parliament thinks fit.
A last-minute addition to the Constitution, the section was believed
to have been inserted only for use in times of financial emergency.(24)
A major step in 1910 was for the Commonwealth to begin using s. 96 to
make annual ‘topping up’ payments to each state to help them deliver services
to their populations. Despite this, Western Australia and Tasmania were
still unable to cope, and within two years extra payments were being made
to these states.(25) Not surprisingly, all states were soon
depending upon s. 96 grants to help them meet their financial needs, a
dependency that has, in fact, increased in the years since. By 1928 the
Commonwealth had also forced the states to accept the newly-created Loan
Council, which henceforth controlled all government borrowings, both Commonwealth
and state. Each of these two developments further undermined the constitutional
provisions.
S. 96 was used in various other ways that continued to cement Commonwealth
dominance and state dependence.
All of these early grants were ‘general purpose’ grants, which meant
that the states could spend the money as they chose. Giving such grants
to the states does not, of itself, ensure the establishment and maintenance
of adequate state-run services. Quite early in our federal history, the
view emerged that there was a need to distribute Commonwealth funds to
ensure ‘that each state has the capacity to provide services at national
average levels of efficiency’, or what has become known as ‘horizontal
fiscal equalisation’.(26) Eventually this became a factor in
Commonwealth grant allocations, after the establishment of the Commonwealth
Grants Commission in 1933. The Grants Commission has been required to
recommend how the Commonwealth’s general purpose grants should be allocated
among the states (and later, the territories). The Commission’s work soon
became ‘integral to the stability of the Australian Federal system’;(27)
it also gave the Commonwealth a clear view of state government finances.
Section 96 also featured in relation to the issue of the Commonwealth
‘takeover’ of the income taxation power. Between 1915 and 1942 Australians
paid income tax to both the Commonwealth and state governments. Because
the level of state taxes varied, and the Commonwealth was constitutionally
required to treat the citizens of all states equally, it meant that there
were different rates of income tax around the nation. Needing to raise
as much money as it could to meet its Great War responsibilities, the
Commonwealth asked the states to temporarily refrain from levying income
tax, but was rejected. The Commonwealth was rejected again in the early
years of World War II, until the Curtin Labor Government legislated to
introduce a uniform national income tax. Section 96 grants were used to
recompense the states, though receipt of these grants was dependent on
a state vacating the income tax field. The arrangement was to last until
one year after the cessation of the war. To the states’ dismay, their
High Court challenge to this new arrangement was lost,(28)
and soon after the war Labor Prime Minister Chifley refused to allow the
states to resume the income tax power, a decision that was supported by
a second High Court case in 1957.(29) Gaining sole access to
this major growth tax ensured that the Commonwealth’s coffers have always
been healthy; the states’ never have.
The states also were weakened by an increasing difficulty in raising
funds by other means. Apart from the loss of an income tax stream, they
have lost former sources of money such as estate duties, or found others
of much less importance and a series of High Court judgments has steadily
deprived them of revenue deemed to be excise taxes.
Over time, therefore, the effect of the changing government financial
arrangements has been that the Commonwealth has collected more funds than
it has needed for its own expenditure, whereas the states (and local government
councils) have been unable to raise sufficient funds to finance their
governmental responsibilities. The term commonly used to describe such
a situation in a federal state is ‘vertical fiscal imbalance’. This can
be seen in all federations, though Australia has the most extreme imbalance
of all.(30) Today, the Commonwealth raises approximately 75
per cent of total general government revenue but is responsible for only
around 60 per cent of total expenditure on government programs. As the
Parliamentary Library’s Richard Webb notes, the difference is made up
by the use of s. 96 grants.(31)
In 1999, the Howard Coalition Government legislated for the source of
the general-purpose transferred funds to be the Goods and Services Tax
(GST). Since then there has been a legislative requirement that Commonwealth
Grants Commission monies must be distributed according to the principles
of horizontal fiscal equalisation.(32) The Grants Commission
has summarised its horizontal fiscal equalisation guidelines in this way:
(i) GST revenue
distribution being a method through which the Commonwealth equalises
states’ fiscal capacities, taking account of their individual expenditure
requirements and revenue capacities; and
(ii) each state government having the
capacity to provide the same standard of services, presuming each:
- makes the same effort to raise revenue from its own sources, and
- operates at the same level of efficiency, as determined by the
Grants Commission.(33)
A study of Australian, German, Canadian, Swiss and United States of American
federations has shown Australia to be the only nation that attempts to
deal with vertical fiscal imbalance through such a means. By contrast,
the USA makes no effort to effect horizontal fiscal equalisation.(34)
Here, again, s. 96 is the constitutional instrument used by the Commonwealth.
As well as ‘general purpose’ grants, s. 96 grants can also be made ‘to
any state on such terms and conditions as the Parliament thinks fit’.
The first of what came to be called ‘specific purpose payments’ were made
in 1923, when the Commonwealth Parliament passed legislation granting
the states money that could only be used on the development of main roads.
Sensing the danger of accepting grants for a purpose chosen by the Commonwealth,
the states supported Victoria in a High Court challenge, only to lose
their bid to have the legislation declared invalid.(35)
For many years specific purpose payments were a relatively small proportion
of s. 96 money granted the states, but since the deliberate increase in
their use by the Whitlam Government (1972–75), successive Commonwealth
governments have maintained a high proportion of such grants. Today, four
out of every ten dollars paid to the states have conditions attached,(36)
in a wide range of policy areas, including hospitals, schools, roads,
housing and natural heritage, none of which is included in the powers
granted the Commonwealth. Taking one state as an illustration, specific
purpose payments to Tasmania in 2004–05 included money for such disparate
purposes as the Gun Buyback Scheme, indigenous education, essential vaccines,
the Skilling Farmers for the Future scheme, crisis accommodation assistance,
and housing assistance for indigenous people. Some specific purpose payments
are provided with few conditions imposed, but many of the grants are subject
to detailed instructions from the Commonwealth as to exactly how the money
should be used.
Were it not for the existence of s. 96 it is difficult to imagine that
the Commonwealth could have gained the level of financial and governmental
dominance it has achieved. As Menzies noted, s. 96:
… has become a major, and flexible, instrument for enlarging
the boundaries of Commonwealth action; or, to use realistic terms, Commonwealth
power.(37)
Howard Government Minister, Tony Abbott, has described the states as
‘institutionalised beggars’.(38) If that is the case, it has
largely been the actions of Commonwealth governments, as well as High
Court judgements, that has made them so.(39)
The net impact of the High Court’s role in interpreting the power relationship
between Commonwealth and states has been to facilitate Commonwealth encroachment
on state areas of responsibility.
The basis of a federal system is that governmental power is divided between
different levels of government. What happens, though, when one level of
government appears to be encroaching upon the powers of another? At such
times, constitutional courts are likely to be called in to adjudicate.
The High Court’s first years saw an effort by a majority of the Court
to protect the ‘balance’ between Commonwealth and state governmental power
the Founders believed they were setting in place. The first Chief Justice,
Sir Samuel Griffith, is said to have had a ‘vested interest’ in this particular
‘ideology of federation’ and under his lead the Court established what
has been called ‘a doctrine of mutual non-interference between Commonwealth
and states’.(40)
By contrast, Justices Higgins and Isaacs, appointed to the High Court
in 1906, shared what has been called ‘a political passion’ for pushing
views which emphasised Commonwealth powers and Commonwealth supremacy.(41)
Isaacs implicitly criticised the Griffith view, when he stated that constitutional
interpretation was simply a matter of interpreting a constitution’s words
alone, rather than imposing a particular ideological view:
…it is not permissible to wander at large upon a sea
of speculation searching for a suitable intent by the misty and uncertain
light of what is sometimes called the spirit of the document…(42)
By 1920, the High Court membership had altered to the point where the
Isaacs-Higgins view could prevail. In the Engineers case of 1920
the Court expressed the view that the key question in matters relating
to the extent of government powers, was just how far Commonwealth power
extended. The impact of any judgment on a so-called ‘balance’ of Commonwealth
and state powers was irrelevant.(43)
Professor Brian Galligan of the University of Melbourne has noted that
although the High Court has wavered at times since the Engineers decision,
the long-term effect of this interpretative approach has been to produce
‘a centralisation of constitutional power’ in the hands of the Commonwealth
Parliament.(44) This centralisation has occurred in relation
to many areas of governmental responsibility. For example, since the Concrete
Pipes case (1971) the Commonwealth has been able to play a more hands-on
role in the area of corporate activity,(45) while the Ha
case (1997) is simply the most recent of a long line of cases that have
steadily closed off the states’ options in regard to establishing taxes
designed to give them significant revenue sources of their own.(46)
The 2006 WorkChoices judgment, which endorsed a broad interpretation
or application of the corporations power, is the most recent of the cases
that have impacted upon the federal balance, leaving the states ‘more
vulnerable to federal intervention’.(47) Prime Minister John
Howard has said that:
It’s not the intention of the Government to interpret this decision
as some kind of carte blanche for some massive expansion of Commonwealth
power.(48)
That may be so as far as the present Government is concerned, but the
decision does add to the armoury available to the Commonwealth. The earlier
comment in this paper about perspective would suggest that it is only
a matter of time before a Commonwealth government—whether Coalition or
Labor—makes use of the judgment to its own advantage.
All Commonwealth governments have tended to regard their own interests
as paramount when interacting with state governments. Some, however, have
made a more deliberate push to expand their powers at the expense of the
states than others, with two governments, one Labor and the other Liberal-National,
notable for their efforts to strengthen the place of the Commonwealth.
Gough Whitlam had no love for what he damned as the ‘archaic’ Australian
Constitution,(49) and fifteen years before coming to power
he was lamenting the ‘very serious obstacles our Constitution places in
the way of efficient and responsible government’. He claimed it was ‘generally
recognised’ that national governments should be responsible for the state
of a nation’s economy, yet in Australia, a country effectively now a single
unit due to improvements in communications, the national government could
not properly assume its proper economic responsibilities.(50)
The solution was obvious:
There are few functions which the state Parliaments now
perform which would not be better performed by the Australian Parliament
or by regional councils. The states are too large to deal with local
matters and too small and weak to deal with national ones.(51)
The Whitlam Government was only briefly in power, but its impact on the
federal system was substantial and a matter of political controversy.
It took over some state functions such as railways, it threatened state
power by its move to give funds to local government, it moved into unknown
territory by its establishment of a department concerned with urban and
rural development, and as noted earlier, it put pressure on state policy-making
through a deliberate increase in specific purpose payments. In 1972–73,
specific purpose payments of $931.5 million represented 25.8 per cent
of total Commonwealth payments to the states; in 1975–76, specific purpose
payments of $4.15 billion represented 48.5 per cent of the total payments.(52)
The Whitlam Government’s tough approach to Commonwealth-state relations
played an important part in its downfall.(53)
The Howard Government
Throughout the first ninety-odd years of federation, Labor’s opponents
often described themselves as the protectors of the federal system, claiming
that the division of government powers among various levels of government
was preferable to ‘complete centralisation of power’ in Canberra.(54)
In John Howard, however, the Liberal Party has had a leader who has always
seemed less than enamoured with the federal structure. Whether as Minister
for Business and Consumer Affairs in 1977, forcing the reluctant states
to accept a national corporations and securities commission,(55)
or as Prime Minister encouraging his ministers to seek uniform practices
in many areas of government services, Howard has described himself as
a ‘nationalist’, having little time for what he has called ‘state parochialism
or state rights’. He also has expressed the belief that had Australia’s
system of government been established at the start of the 21st century,
it is unlikely a federal structure would have been the outcome.(56)
Various Howard Government ministers have similarly expressed their doubts
about the federal arrangements. Former Minister for Employment, Workplace
Relations and Small Business, Peter Reith, was critical of industrial
relations arrangements,(57) Attorney-General Philip Ruddock
has spoken of the need for the ‘efficiency’ that would come were the Commonwealth
to take on more policy areas hitherto the reserve of the states,(58)
Minister for Education, Julie Bishop, has attacked the ‘dysfunctional’
nature of federal policy-making,(59) while Treasurer Peter
Costello has spoken of the states ‘moving towards the role of service
delivery more on the model of divisional officers than sovereign independent
governments’.(60) In line with Costello’s view, Minister for
Ageing Santo Santoro has referred to the need for Commonwealth oversight
of state service delivery, to enhance governmental accountability.(61)
The most radical views have been those of Minister for Health, Tony Abbott.
Observing that ‘conservatives believe in small government rather than
many governments’, he has rejected the standard conservative view of the
work of the Constitution-writers.(62) While acknowledging their
achievement in creating a new nation, Abbott has claimed that it was through
‘accident as much as design’ that Australia was established as a federal
state and that contrary to accepted wisdom, the Founders actually sought
to give ‘as much power as possible’ to the new national government. Criticising
what he has labelled modern day ‘feral federalism’, Abbott has said that
in any dispute between state and national interests, ‘Australia’—by which
he means the Commonwealth Government—‘must come first’.(63)
All of which has seen the Howard Government making decisions well outside
the range of powers granted by the Constitution and much in excess of
previous Commonwealth governments of all types. There have been two main
avenues by which the Government has attempted to achieve its ends.
On the one hand, the Howard Government has mirrored aspects of the Whitlam
years by linking funding proposals to the imposition of particular policy
aims. Queensland and Western Australia accepting three-year funding agreements
for their Technical and Further Education (TAFE) systems with the proviso
that TAFE staff would be offered Australian Workplace Agreements, is just
such an example.(64) Another was former Minister for Education
Brendan Nelson’s linking of education funding to his desire to see a national
school testing program put in place.(65)
The second means has been a consequence of the size of the Commonwealth
surplus during its period of office. This has enabled the Commonwealth
to make financial grants that effectively bypass the state and territory
governments. Payments made directly to local governments for programmes
such as the Roads to Recovery are typical. Examples referred to in the
2004 Commonwealth election included the provision of tool boxes for apprentices
and the establishment of technical secondary colleges; rather more narrowly
focused cases included the building of a bridge in the Queensland electorate
of Petrie, or the dredging of Tumbi Creek in New South Wales.
Despite the fact that by 2006 we have the unusual situation of Labor
spokespeople speaking out on behalf of the states against a Prime Minister
whose government appears to be weakening the federal system,(66)
the views of major party members in the Commonwealth Parliament regarding
the importance of Commonwealth power tend to be similar. Nearly thirty
years after his loss of office, former Prime Minister Whitlam applauded
the Howard Government’s industrial law changes:
Liberal Prime Minister John Howard correctly wishes our
national parliament to have jurisdiction to make laws with respect to
the terms and conditions of industrial employment.(67)
When constitutions are written, they are seen by their writers as written
for all time. What the writers cannot foresee are the pressures placed
on all constitutional documents by the inevitable changes that occur in
every society. As circumstances have altered, so governments have been
taken in directions that Australia’s constitution-writers could not have
envisaged.
One simple explanation for the growth of Commonwealth power is that all
governments have gradually accumulated more responsibilities. At the state
level, governments do much more than once was the case and at Commonwealth
level the story is the same. This is due largely to the steady increase
in the use of tied grants to enable the Commonwealth Government to introduce
and refine policy in areas long regarded as a responsibility of the states.
For example, in 1972 the Commonwealth first became involved with funding
child care in a substantial fashion, providing funding for capital grants,
recurrent grants and research grants relating to child care. Since then,
Commonwealth participation in child care has increased to the extent that
it now outlays almost $1.7 billion annually.(68) As government
has done more, so have Australians pushed their governments to maintain
standards, to introduce new facilities and generally to increase their
commitment to such policy areas. A consequence of the expansion of the
Commonwealth into areas traditionally state preserves, is that the Commonwealth
is increasingly seen as the government most likely to ensure that people’s
needs are met. Analysis of polling in the 2006 Queensland election indicated
that a significant number of voters blamed the Commonwealth for problems
in the state’s hospitals, ‘believing there are enough funds at a federal
level to fix everything’.(69)
The movement of people around the country is much greater than at the
time of Federation. As people move residence from one state to another,
or within a particular state, it is natural that they should expect that
government services they receive should be of equal standard wherever
they happen to live. The impact of a mobile population has long been seen
in education. For example, a Queensland academic has noted that curriculum
discontinuity has been identified by mobile families as a major obstacle
for educational success, a problem that is emphasised:
… when children crossed state borders and entered different
educational systems, where neither the school entry age nor the year
levels match those of the Queensland system.(70)
This has long been a problem for children of defence force families forced
to move as parents regularly take up different postings around the country
and has been cited by Brendan Nelson as a reason for moving to remedy
‘the crippling impact of 8 different educational systems within one nation’.(71)
The age that Australian children start school varies around the country:
four years and five months in New South Wales and South Australia, four
years and six months in Queensland, Western Australia and the Northern
Territory, four years and eight months in Victoria and the ACT and five
years in Tasmania. Does this matter? It certainly creates difficulties
for parents planning to move from one state to another. In addition, the
Commonwealth Government has argued that lowering the school starting age
to a standard age would boost economic productivity and increase the number
of students completing year 12.(72)
As Australian cities have grown rapidly, so have the problems for government.
There is growing pressure to develop rail services especially to outer
urban areas, the great mass of cars on the roads is creating enormous
problems, water services are increasingly stretched to near-breaking point,
renewable energy and reduction in energy usage are important and gentrification
and rising house prices are forcing people to locate to the outer urban
areas or into higher-density housing. The cities themselves are increasingly
unable to pay for all of this change and with transportation gridlock
threatening in some areas, there is a need to build arrangements into
the governmental system that will be able to cope with the increasing
pressures. As a House of Representatives committee noted in 2005: ‘our
cities risk becoming more unsustainable across environmental, economic
and social indicators’.(73)
The problem is that the organisation, management and government of cities
was not something that Australian politicians of the late 19th century
saw as necessary to include in our national Constitution. As a consequence,
cities must cope with the impact of uncoordinated policies from all three
levels of government, that do little to promote harmonised and sustainable
development. The cities, in fact, have outgrown our federal arrangements,
developing as ‘chaotic responses to discrete programmes and policies’.(74)
Most local planning takes place at the local government level, yet constitutional
responsibility lies elsewhere—the Australian federal system is not necessarily
the most effective means of achieving sustainability.
A major reason for Australian colonies federating was the desire to eradicate
internal customs barriers—to create a common market within the new nation.
Internal customs duties soon disappeared, but Australia has never achieved
a perfect common market. In recent years, this has restricted the development
of businesses operating across state boundaries. There is the frustration,
for example, of businesses having to deal with eight sets of environmental
approvals or businesses finding that they must deal with different employment
classifications, which act as barriers to the mobility of skilled workers.
Such problems add to costs. A survey has estimated that the cost impact
of different state and territory building laws to be between one and five
per cent of company turnover. Although corporations form the major part
of nationally operating businesses, the Commonwealth in fact does not
have sufficient powers to establish a national corporation-regulation
scheme.(75)
From an early stage, Australian governments have had to respond to international
events in a way that has tended to impact upon the federal system. From
the time of the First World War, when the Commonwealth involved itself
in the fixing of prices of everyday products, the national government
has increasingly felt the need to act in ways that have affected state
powers.
An increasingly important example has been the way in which Commonwealth
power has been used to implement international treaties or conventions.(76)
In 1936 the High Court established that the Commonwealth could use its
power in relation to external affairs to implement international treaties
or conventions, even in areas where it lacked formal power.(77)
An example of the consequences of this judgment was the Tasmanian Dam
case of 1983, wherein the High Court said that the Commonwealth’s power
over external affairs enabled it to force Tasmania to halt the building
of a hydro-electric dam, on the grounds that the area to be flooded was
World Heritage Convention-listed. The fact that the Commonwealth did not
have direct power over dam building was constitutionally irrelevant.(78)
As Mr Justice Dawson of the High Court noted:
… even with existing treaties to which Australia is a
party, the Commonwealth presently has the capacity to cut a swathe through
the areas hitherto thought to be within the residual powers of states.(79)
Overall, use of the ‘external affairs’ power by the Commonwealth is an
important political weapon which enables the national government to involve
itself in policy matters once considered the sole responsibility of the
states, such as the preservation of the environment. This is emphasised
by the pressures of globalisation, which often require speedy decision-making
at the highest level of government. In effect, all governments are answerable
to the international community.
The federal system has thus altered markedly and inevitably since Federation,
particularly in respect to the accumulation of power by the Commonwealth
government. To acknowledge this, however, is not to say—as some do (see
below, pp. 29–30)—that the federal system is without merit.
Since the early years of the Australian nation, three important structural
factors have meant that cooperative relations between the Commonwealth
and the states have often been valuable in enabling the Australian federation
to function relatively smoothly:
An example of the latter occurred in 1939 when the Commonwealth gave
£1000 for the purpose of bushfire relief in Tasmania. From that time the
Commonwealth, while regarding the handling of most disasters as a state
matter, came to recognise the need for a level of financial assistance
that a state would not be able to afford.(81) Today, Natural
Disaster Relief Arrangements are administered by the Commonwealth
Department of Transport and Regional Services on behalf of the Australian
Government. These arrangements, which apply to natural disasters caused
by bushfire, earthquake, flood or storm, are a significant example of
the intergovernmental cooperation that helps give continuing life to the
Australian federation.(82)
Over the years there have been many other examples of cooperation between
the governments, indicating that the federal system often allows governments
to respond appropriately to deal with perceived needs. For example, much
has been done through Premiers’ Conferences (today, the Council of Australian
Governments), councils of ministers such as Attorneys-General and a large
number of ad hoc or standing administrative groups. Such bodies remain
in constant communication, exchange information and sometimes work together
on joint operations. Co-operation can also take the place of joint programmes,
formal agreements, intergovernmental administrative arrangements and occasionally
the passage of uniform legislation. Current (November 2006) Intergovernmental
Agreements include those dealing with natural gas pipelines (1997), food
regulation agreements (2000 and 2002), foot and mouth disease (2002),
research involving human embryos (2004) and surface transport security
(2005).
An example of ministerial co-operation is the area of justice administration.
The Australasian Police Ministers’ Council (APMC) was established in 1980
to promote a ‘co-ordinated national response to law enforcement issues
and to maximise the efficient use of police resources’. Its initial role
was the development of a co-ordinated approach to police policy and operations,
and in May 1986 this was broadened to include ‘the co-ordination of the
national attack on organised crime and the co-operative efforts needed
to achieve that goal’. More recently its agenda was extended to include
a wide range of national law enforcement policy development and implementation
activities including DNA legislation, a national sex offenders registry
and gun control. Since 1993, the APMC has been part of Ministerial Council
on the Administration of Justice, along with the Australasian Police Ministers’
Council, the Inter-Governmental Committee of the Australian Crime Commission
and the Corrective Services Ministers’ Conference.(83)
The less politically controversial an issue, the easier it is to achieve
intergovernmental cooperation—it is easier to achieve co-operation in
matters to do with food regulation than with the uniformity of school
curricula. To a major degree, cooperation is easier to achieve in areas
where there is no political stimulus for the Commonwealth to achieve national
uniformity. Joint action therefore emerges primarily for reasons of ‘political
and administrative convenience’.(84)
But politics is never far from the surface. The desire to collaborate
with other governments is invariably a tactical decision and can soon
be cast aside by conflict between politicians who often reject cooperation
for short-term political reasons. There is also the impact of perspective.
The Commonwealth view of cooperation between governments is often driven
by a desire for uniformity, whereas state and territory attitudes are
very much influenced by a perception of local needs and attitudes. A common
consequence is frustration on all sides. For all the political difficulties
expressed, intergovernmental cooperation plays an important part in maintaining
the usefulness of the Australian federal system.
In any nation, local communities have particular needs, some of which
may well be beyond the purview of national policy. The Australian federal
system provides two main ways in which such communities can make their
own rules. Local government councils—the creations of state governments—can
achieve objectives in many policy areas, while state or territory governments
facilitate decision-making within the borders of the relevant state or
territory. Federalism therefore provides an institutional means of recognizing
the need for communities to govern themselves in some policy areas in
accordance with their own perceived interests:
Federalism institutionalises a system of government predisposed
to a more participatory and accessible mode of operation. It is potentially
more participatory because the multiple levels or arenas of governance
multiply the opportunities for meaningful citizen involvement in the
political process. It is potentially more accessible because of the
multiple access points opened up for citizen access to the governmental
sphere.(85)
Policies can thus be closely tailored to the local needs. For example,
Western Australian industrial regulation, introduced in response to the
needs of its remote mining industry, allowed more intensive working hours,
long before they were allowed for in federal awards.The existence of such
local needs is in fact likely to be a major factor in ensuring that federal
government remains the basic Australian structure. As Professor Greg Craven
puts it, ‘real differences of place interact with equally real political
and social differences’.(86)
Advocates of federalism see an advantage in different jurisdictions having
power over similar important areas of administration because it enables
experimentation by one government before all take up a particular policy.
Among the better known examples have been South Australia’s leadership
of social reform in the 1970s, Victoria’s introduction of compulsory seat
belts in 1970, and the Northern Territory’s development of flexible teaching
strategies during the 1980s. Because of the poor outlook for the Victorian
economy in the early 1990s, the Kennett coalition government was able
to push the policy frontiers, and experiment with a raft of governmental
reforms that were not politically possible elsewhere at the time. Most
of the experiments, such as the massive re-creation of the local government
system, were successful and were subsequently adopted to some degree by
other states.
The other side of experimentation is that mistakes—and there are always
likely to be some—can be isolated in a particular state or states that
have tried a new policy approach. For example, it has been claimed that
the education policy of the Carr Government in New South Wales had been
shaped by Labor’s acknowledgment of weaknesses in the Victorian Certificate
of Education introduced by the Cain Labor Government during the 1980s.
In turn, Victoria under Premier Kennett, built on the experience of the
Carr Government’s successes in this area.(87) Some would say
that this is also a warning about seeking national uniformity in policies,
for there is no guarantee that some mistakes will not be made by the Commonwealth
Government as well as by the states: ‘a federation, … is not a model of
efficiency’.(88)
Despite the long-term attempt by the Commonwealth Grants Commission to
ensure that there is an equality of services across the nation, critics
claim that while states retain important policy-making powers the uniform
delivery of equal services remains impossible. A basic problem is that
while the Grants Commission has delivered equal capacities, there is no
obligation on the states to use these. At the time of writing, Queensland
is the only Australian state in which Auslan, the language of the Australian
deaf community is not widely offered. In order that she receive an education
where this language was used, eight-year-old Queenslander Tiahna Hurst
recently moved with her family to a state where Auslan was more widely
used. In July 2006 the Federal Court ruled that Tiahna had been discriminated
against by the Queensland Government.(89) This case is an indication
of how the very existence of the federal system can have the unintended
consequence of introducing and maintaining inequalities across the nation.
Two policy areas where this can be seen are those of indigenous affairs
and policies of relevance to Australian women.
One major difficulty for indigenous people has been that it has not always
been clear where governmental responsibility for particular services actually
lies. Apart from areas of Commonwealth responsibility, many of the day-to-day
living needs of communities are provided by such agencies as local governments
or state departments dealing with social welfare matters. The constitutional
inexactitude so typical of federal systems has created administrative
grey areas that protect governments and frustrate their clients. In such
a situation, indigenous recipients of services can be left guessing which
government is relevant to their needs.(90)
Professor Kim Rubenstein of the Australian National University has noted
the difficulties the division of power in the area of family relationships
has caused women and their families. An example is the Commonwealth possessing
the power to legislate with regard to de facto couples’ disputes over
children, but not in regard to their disputes over property. Rubenstein
also notes the Commonwealth’s relative lack of power in regard to child
welfare matters and in particular, issues relating to child protection.
Essentially, the difficulty lies in the fact that the Commonwealth has
limited and piecemeal powers in regard to family relationships, which
have made the lives of women ‘more difficult and time consuming’ than
they need have been.(91)
Administrative differences can create difficulties for residents of particular
communities. In a federal system the obvious way in which regional governments
are organised is within the borders of each. With different states having
different policies and administrative arrangements, however, local residents
have found that ‘dealing with different rules and regulations between
the states …[can become] an irksome way of life’.(92) The range
of problems has become large, including such matters as taxi licensing,
mental health services, fishing and boating licences, operating rules
for local police, fire and ambulance services, trading hours, taxation,
daylight saving and the use of 1300 and 1800 telephone services. In many
cases it has been the creation of different administrative arrangements
that annoys and frustrates local residents, but in many other cases the
difficulties can be far more serious. This was pointed out in a submission
from a resident of the near-border Victorian town of Beechworth to the
2005–06 Senate select committee on mental health:
The continuing problems of state cross border anomalies
is an on-going source of frustration that needs to be addressed with
some urgency if effective and timely care is to be provided to clients.(93)
Governments have been alert to such frustrations—at different times New
South Wales has had the Border Anomalies Committee (established 1979),
the Regional Communities Consultative Council (operating under the aegis
of the Premier’s Department), and the One City Plan designed to create
a seamless administrative structure for Albury-Wodonga (2001). All achieved
some improvement for local residents, but not enough to dissuade various
MPs from border electorates from supporting a private member’s Bill seeking
to establish a Cross-Border Commission in 2004–05.(94) The
Bill failed to pass the New South Wales Parliament.
The Business Council of Australia (BCA) is critical of the current state
of the Australian federal system. In particular, the BCA notes that the
existence of multiple governments, each having a finger in particular
policy pies, produces a marked ‘duplication of effort and inconsistencies
in programs and regulations’. The outcome is not only a bureaucratisation
leading to an unnecessary increase in the costs of public administration,
but also a heavy financial burden for firms attempting to do business
across Australia. This is probably an inevitable consequence of having
different law-making areas within a nation, but critics believe that in
the modern, globalised economy it is a burden that should be addressed
with the aim of eliminating it.(95)
This bureaucratisation can be seen particularly clearly in regard to
government regulation. The Commonwealth Government’s Taskforce on Reducing
Regulatory Burdens on Business has drawn attention to the size of what
it sees as major problems for Australian government:
- there are more than 1500 Commonwealth Acts of Parliament, plus approximately
1000 statutory rules in force, plus an unknown amount of other Commonwealth
‘subordinate’ legislation
- each state and territory administers a large body of its own legislation
and regulation—in Victoria 69 regulators of business administer 26,000
pages of legislation and regulation
- there are ‘literally millions’ of pages of rulings, explanatory memoranda,
and advisory notes
- one indicator of the extent and complexity of regulation that affects
business is that the three levels of government administer over 24,000
different types of licences for businesses and occupations.(96)
To all of this could be added the major example of inconsistent policy
that is the different workers’ compensation regimes across the nation.
In a BCA-commissioned report (October 2006), Access Economics estimated
that such problems cost the nation an many millions per year.(97)
Australia’s infrastructure—electric power generation facilities, roads,
railways, telecommunications, airports, potable water, irrigation, waste-water
management and so on—is ageing and in many cases is in urgent need of
replacement or upgrading. State governments have traditionally been the
main providers of such infrastructure and therein lies a major problem,
for the development and maintenance of infrastructure suffers in Australia
from:
… a lack of integration and co-ordination … with the
three tiers [of government] each having separate and sometimes overlapping
roles and responsibilities.(98)
The Australian federal system imposes particular complexities and constraints
that are not experienced in many other federations, for Commonwealth-state
financial relations have ‘a pivotal role in shaping infrastructure investment’.(99)
In such a setting, with many infrastructure issues crossing state borders,
it is often argued that national leadership can produce large benefits.
As former Liberal Party national leader, John Hewson, has put it:
I think infrastructure as a national responsibility makes
sense, because competition between states … really mean[s] uneven and
unwanted development of infrastructure in some parts of Australia versus
others and so on, it just bedevils the whole country. We really have
to act in economic terms and in business terms, as an integrated nation.(100)
An increased need for infrastructure development will be a pressing issue
in the coming decades. It is uncertain whether the federal system will
be able to cope with this.
Local government exists in Australia as the creation of the states—most
controversially, not only can the state parliaments establish local government
councils, but state governments can dismiss them, quite arbitrarily. None
of the colonial politicians who drew up the Australian Constitution apparently
believed that local government should be given specific constitutional
status and therefore, constitutional protection. Despite this, local government
has been affected by the ongoing story of Commonwealth-state financial
relations, as well as by the increased power of the Commonwealth Government
to influence such local responsibilities as road-building, housing and
the provision of social welfare arrangements. There is an argument suggesting
that as the Commonwealth becomes stronger, so the right of people to govern
themselves in local matters should be given constitutional recognition—as
it is in the state constitutions.
Twenty years ago, the Commonwealth Department of Local Government and
Administrative Services supported constitutional recognition of local
government on two grounds: because local government was elected and publicly
accountable and because local government participates in the federal system
of public administration.(101) The Constitutional Commission
(1985–88) agreed, expressing its belief that any constitutional recognition
should require:
(a) that the people of each state are represented by
an elected Local Government body
(b) that Local Government bodies shall not be dismissed
arbitrarily, and
(c) that, if the Local Government body in any area is
lawfully suspended pursuant to a state law, it will be restored within
a reasonable period by elections.
Accordingly, the Commission recommended that a new section 119A be added
to the Constitution:
Each state shall provide for the establishment and continuance
of local government bodies elected in accordance with its laws and empowered
to administer, and to make by-laws for, their respective areas in accordance
with the laws of the state.(102)
An attempt to amend the Constitution in this way failed in 1988. This
seems to have been due to opponents choosing to link this with the Commonwealth
Government’s three other amendment proposals—for four-year terms for the
Commonwealth Parliament, democratic elections and certain civil rights—describing
them all as giving ‘more power to the Federal Government at the expense
of the states’.(103) Perhaps unfortunately, the constitutional
entrenchment of local government fell by the wayside, but the issue is
still relevant. In 1997, the Australian Local Government Association stated
that:
Local governments are elected to represent their local
communities; to be a responsible and accountable sphere of democratic
governance; to be a focus for community identity and civic sprit; to
provide appropriate services to meet community needs in an efficient
and effective manner; and to facilitate and coordinate local efforts
and resources in pursuit of community goals.
To these ends, the principle of elected Local government
must be enshrined in the Australian Constitution and the constitutions
of each state and the Northern Territory.(104)
On 6 September 2006, a resolution was introduced in the House of Representatives,
which said inter alia that each house:
… recognises that Local Government is a part of the governance
of Australia, serving communities through locally elected councils …
… acknowledges the role of Local Government in governance,
advocacy, the provision of infrastructure, service delivery, planning,
community development and regulation.
Despite its passage through the Parliament, the resolution still fell
short of what many local government advocates would prefer.
Commonwealth and state governments, of all parties, have long used constitutional
grey areas to deny responsibility for weaknesses in their performance.
Criticism of the Commonwealth over administrative failures in particular
areas will see the Commonwealth blame the states which, we are often reminded,
have the constitutional responsibility of the particular policy area.
With the emergence of specific purpose payments, the later establishment
of Grants Commission, and the creation of the GST, the avoidance of responsibility
has often been seen in claims by the states that the reason they cannot
perform better has been the niggardliness of the Commonwealth Government.
Minister for Health, Tony Abbott, has spoken of the problem of public
hospitals, part-funded by the Commonwealth, but wholly run by the states.
Abbott has said that the consequences of this has been ‘the states blaming
the Commonwealth when anything goes badly wrong’—as in the case of the
Labor government in Queensland in the 2006 state election.(105)
A more recent example is of the increasing practice of state (and occasionally
the Commonwealth) governments to shift costs to local government. According
to the Commonwealth Grants Commission, local government has been taking
on extra functions due to governments devolving responsibilities for new
functions, or where the complexity or standard of a service is increased,
with local government picking up the increase in cost. Cost-shifting can
also involve a government withdrawing from a service, with local government
forced to step in to maintain the service, or withdrawal of Commonwealth
or State funds forcing local government to continue a service due to public
demand.(106) An example is library funding, which has increasingly
been reduced by state governments, forcing local government to assume
an extra funding responsibility rather than abandon the service altogether.(107)
All of which gives more ammunition for the federal system’s critics.
Where is the Australian federal system heading? It is ironic that at
a time when many are expressing doubts about the value of Australian federalism,
the federal idea is being extended throughout the contemporary world.
Various countries—the United Kingdom and Spain, for example—are attempting
to accommodate internal diversity by devolving power to regional governmental
bodies. In Australia, by contrast, many believe the original federal model
has had its day.
The Constitution is a federal document, drawn up by regional politicians
determined to protect the long-term position of the states. Voters in
the Federation referenda were spoken to incessantly about the need to
protect the place of their colony in the future union, and in the years
since voters have often been asked to show support for their state, most
notably in regard to constitutional amendments proposing to increase central
government power. Voter response has been spectacular—all 17 constitutional
amendment proposals to increase Commonwealth economic power have been
rejected, as have four others dealing with non-economic powers. Two referenda
suggesting Commonwealth involvement with local government have also failed.
Constitutional amendment can thus be difficult if it strays outside the
federal parameters that can seem to apply as much today as they did in
the late 1890s. Whatever the merits of a proposal to alter aspects of
the Australian federal arrangements, the difficulty of constitutional
change in Australia makes it hard to see such changes being made formally
to the Constitution:
Australians will not alter aspects of the federal system
of government if they perceive its basic structure to be under threat.(108)
The problem is that occasional changes to the Constitution so as to bring
the document closer to the current realities of government, are not made.
The Constitution thus can appear less and less relevant to the real world
of Australian government.
Can a constitution written in the late-19th century cope with the pressures—both
known and predicted—of the 21st century? This question is illustrated
in a writer’s wondering if the continuance of the ‘sovereign’ state of
Tasmania can be justified:
Tasmania continuing to be a sovereign state is increasingly
hard to sustain as a serious proposition.
It’s a state which cannot hope to adequately meet the
challenges and expectations of the 21st century without being part of
greater and more sophisticated governmental and community structure
like that which exists in a state such as Victoria.
It is pure folly to think the political, legal and social
infrastructure of this island of fewer than half a million people can
ever attain a consistently high standard.(109)
The Abolish the States Collective (ASC) is a private
organisation whose members believe that the only way Australian government
can be made relevant and effective in the early years of the 21st century
is for state governments to be abolished ‘at the earliest possible
opportunity’.(110) In justification of this position they claim:
- that state governments are divisive
- that the states are wasteful in their duplication of government services
- that the states place an enormous cost burden upon the nation, putting
Australia at a competitive disadvantage in an increasingly competitive
world.
The ASC maintains that state government functions could be performed
effectively at either the national government level or at a level closer
to the people than the states:
We believe that Australia needs a single, effective national
government which would assume most of the powers and responsibilities
held by the present state and federal governments. We also believe our
national government should administer uniform national laws, but we
endorse flexibility in the local application of such laws.
Were the states to be abolished, how might the replacement structure
be organised?
One idea, which has a long pedigree, would be for a two-tier system to
be created, made up of the national and ‘regional’ governments. As early
as 1920, the Nationalist MHR, Charles Marr, was claiming that:
One Parliament for Australia, with some bodies—say, county
councils—would provide a far better administrative system than exists
today with the state and Federal Parliaments.(111)
Former Prime Minister Whitlam pointed to the governmental imbalance contained
in the national Constitution:
Ideally, one continent should have neither so few state
governments nor so many local government units. We should not have a
federal system of overlapping parliaments and a delegated but supervised
system of local government. We should have a House of Representatives
for international matters and nationwide national matters, an assembly
for the affairs of each of our dozen largest cities and regional assemblies
for the few score areas of rural production and resource development
outside those cities.(112)
More recently a combination of national government and regions has been
advocated by many observers including former independent MHR, Ted Mack,
New South Wales Independent MLA Clover Moore, Lindsay Tanner MHR (ALP),
and former Liberal Minister for Regional Services, Territories and Local
Government, Senator Ian Macdonald.(113)
Not all believe the states should be abolished, preferring to push for
a modernising and a re-allocation of powers between the Commonwealth and
states. Professor George Williams of the University of New South Wales,
for instance, claims that the Constitution-writers’ granting of power
over international trade and commerce to the Commonwealth, but not power
over trade within state borders, might have made some sense at the end
of the 19th century, but not at the beginning of the 21st century:
Our economy does not now consist of discrete sectors
of commerce within each state or even within Australia, but exists within
a world global markets in which there is competition and interdependence
with the economies of other nations.
Williams believes that in such a setting it makes little sense for businesses
to have to deal with nine different Australian jurisdictions. In addition,
he points to the constitutional barriers to the creation of an integrated
national judicial system and the fact that the Commonwealth lacks a general
commerce power.(114) Williams also believes that although urgent
problems relating to controversial policy areas such as health and education
can be resolved by political compromise, such arrangements are unlikely
to be satisfactory over the long term. The system can be reformed and
the advantages of federalism retained, but it is important to analyse
‘whether the division of powers agreed to in 1901 is the best model for
today’.(115)
Despite the enthusiasm with which abolitionists approach the task of
eradicating the states, it is quite likely that the three tiers of government
will be retained. This is partly because of the political difficulties
in removing them—the states run large governmental apparatuses. They are
responsible for three-quarters of all public sector employment. There
is also the possibility that the states might be used more efficiently
within the governmental system. Professor Pat Weller of Griffith University
has suggested the likelihood of there being a rationalisation of funding
by the Commonwealth government. With the states increasingly unable to
raise most of the money they need for their administration, the Commonwealth
will be more and more tempted to direct s. 96 specific purpose payments
in a way that aims to reduce the differences between state programmes.
Weller speaks of the states delivering the services ‘within a framework
of Federal funding and program design’.(116) Former Labor Queensland
Premier, Wayne Goss, has suggested that such a change would see a significant
alteration in the relationship between the centre and regions in Australia:
… it is most likely that regional governments will not
be a significant force but rather providers of services determined,
not entirely but to a significant degree, by the national agenda.(117)
More recently, a similar arrangement has been suggested by a number of
prominent Liberals, including Peter Costello and Santo Santoro. They have
suggested that service policy-making become the sole responsibility of
the Commonwealth, with the states and Territories acting as the deliverers
of the services, such as education and health. Senator Santoro, for example,
has proposed that:
… in most fields, the states should have responsibility
for service delivery, and the Commonwealth a central role in the development
of national benchmarks to guide and assess the states.(118)
Such an arrangement would, at least on paper, see the maintenance of
the federal structure, even if the realities of power and administration
were rather different from the outline put in place at the time of Federation.
It is not clear where local government, which is controlled by state legislation
and state governments, would fit into such an arrangement.
Such a change would mean the retention of the federal system, but in
a different form.
Where to for the Australian federal model? There is still much support
for a political system that has worked quite well since its beginnings
in 1901. However, supporters, as well as those who disparage the system,
believe there are problems. Even the Premiers see serious problems that
need repair.(119) There is a general consensus, therefore,
that the Australian federal system does not work as well as it might.
The question for the nine governments is: what should be done to enhance
its performance and its reputation? The way forward is far from clear,
particularly as any move to wholesale change will inevitably become enmeshed
in party politics. It has been forever thus.
Parliamentary
Library papers on Australian federalism
Scott Bennett, ‘The politics of constitutional
amendment’, Research Paper, no. 11, 2002–03, http://www.aph.gov.au/library/pubs/rp/2002-03/03RP11.htm
Luke Buckmaster and Angela Pratt,
‘Not on my account! Cost-shifting in the Australian health system’, Research
Note, no. 6, 2005–06, http://www.aph.gov.au/library/pubs/rn/2005-06/06rn06.htm
John Gardiner-Garden, ‘Commonwealth
expenditure on Indigenous affairs 1968–2004’, Research Note, no. 18, 2004–05,
http://www.aph.gov.au/library/pubs/rn/2004-05/05rn18.htm,
Marilyn Harrington, ‘Commonwealth
funding for schools since 1996: an update’, Research Note, no.
41, 2003–04, http://www.aph.gov.au/library/pubs/rn/2003-04/04rn41.htm
Denis James, ‘Federal-state financial
relations: the Deakin prophecy’, Research Paper, no. 17, 1999–2000,
http://www.aph.gov.au/library/pubs/rp/1999-2000/2000rp17.htm
Greg McIntosh, ‘Caring for the kids.
Commonwealth funding for child care’, Research Note, no. 18, 2003–04,
http://www.aph.gov.au/library/pubs/rn/2003-04/04rn18.htm
Greg McIntosh, ‘The changing face
of public housing’, Research Note, no. 24, 1999–2000, http://www.aph.gov.au/library/pubs/rn/1999-2000/2000rn24.htm
Greg McIntosh, ‘Child care support—what
do families get?’, Research Note, forthcoming.
Greg McIntosh and Janet Phillips,
‘The Commonwealth-state Housing Agreement’, E-Brief, 2001, http://www.aph.gov.au/library/intguide/sp/statehouseagree.htm
Peter Prince and Thomas John, ‘The
Constitution and industrial relations: is a unitary system achievable?’,
Research Brief, no. 8, 2005–06, http://www.aph.gov.au/library/pubs/rb/2005-06/06rb08.pdf
Richard Webb, ‘Commonwealth general
purpose financial assistance to local government’, Research Paper,
no.1, 2003-04, http://www.aph.gov.au/library/pubs/rp/2003-04/04RP01.htm
Richard Webb, ‘The Commonwealth Government’s
role in infrastructure provision’, Research Paper, no. 8, 2003–04,
http://www.aph.gov.au/library/pubs/rp/2003-04/04rp08.htm
Richard Webb, ‘Commonwealth road funding
since 1990’, (updated 1 March 2004), Research Paper, no. 7, 2003–04,
http://www.aph.gov.au/library/pubs/rp/2003-04/04rp07.htm
Richard Webb, ‘Developments in Commonwealth-state
financial relations since 2000-01’, Research Brief, no. 11, 2005–06,
http://www.aph.gov.au/library/pubs/rb/2005-06/06rb11.htm
Richard Webb, ‘Horizontal fiscal equalisation’, Research Note,
no. 1, 2002–03, http://www.aph.gov.au/Library/pubs/rn/2002-03/03rn01.htm
Richard Webb, ‘Public finance and
vertical fiscal imbalance’, Research Note, no. 13, 2002–03, http://www.aph.gov.au/library/pubs/rn/2002-03/03rn13.htm
- Christian Kerr, ‘Why Peter Beattie’s right and wrong on federalism’,
Crikey, 12 October 2006, http://www.crikey.com.au/Politics/20061012-Why-Peter-Beatties-right-and-wrong-on-federalism.html,
accessed 25 October 2006.
- Henry Sidgwick, The Elements of Politics, London, 2nd ed. 1897,
p. 533.
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Journal of Politics and History, vol. 1, no. 2, May 1956, Part II,
p. 242.
- The Australian Constitution, Constitutional
Centenary Foundation, Carlton, 1997, pp. 48–9.
- Ivo D. Duchacek, Power Maps: Comparative Politics of Constitutions,
ABC-Clio, Santa Barbara, 1973, p. 123.
- ibid., p. 124.
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Federalist, Number 1, June 1998, p. 54.
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p. 2496.
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Wales, Legislative Assembly, Debates, Session 1897, p. 1210.
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1970.
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Biography, University of Queensland Press, St Lucia, 2nd
ed. 1984, pp. 199–200.
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Issue 1, September 2005, p. 5.
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and Dennis Woodward (eds), Government, Politics, Power and Policy
in Australia, Pearson, Sydney, 8th ed. 2006, p. 155;
see also Mike Steketee, ‘The centralist contradiction’, The Australian,
10 February 2005.
- Steele Hall, quoted in P. Ward, ‘Steele—man in a muddle’, The Australian,
10 February 1977.
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p. 1982.
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28–29 July 2003.
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Australian Federalism’, Australian Journal of Public Administration,
vol. 65, no. 2, June 2006, p. 35.
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University Law Review, vol. 3, 1961–62, pp. 2–3.
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Times, 23 October 2006.
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financial relations in Australia since Federation, Nelson, Melbourne,
1972, p. 66.
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of the Australian Commonwealth, Angus & Robertson, Sydney, 1901,
p. 870.
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no. 1, Parliamentary Library, Canberra, 2002–03.
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Grants Commission, Australian Government Publishing Service, Canberra,
2nd ed. 1995, p. 257.
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65 CLR 373.
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99 CLR 575.
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Australian Economic Review, vol. 33, no. 3, 2002, p. 291.
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Note, no. 13, Parliamentary Library, Canberra, 2002–03.
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Arrangements) Act 1999, Schedule 2, Part One, p. 8.
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Fiscal Equalisation’, Information Paper CGC 2002/1, September 2002.
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equalisation regimes in selected federations’, in Iain McLean, ‘Fiscal
Federalism in Australia’, http://www.nuff.ox.ac.uk/Users/McLean/Fiscal%20Federalism%20in%20Australia.pdf,
accessed 20 June 2006; see also, Webb, ‘Horizontal fiscal equalisation’,
op. cit.
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38 CLR 399.
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since 2000–01’, Research Brief, no. 11, Parliamentary Library,
Canberra, 2005–06.
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Commonwealth. An examination of the growth of Commonwealth
power in the Federation, Cassell, London, 1967, p. 76.
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Australian,
12–13 August 2006.
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Power: Transition in Federal-State Finance’, New South Wales Parliamentary
Library Research Service, Briefing Paper No. 14/06, October 2006.
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The Rebel as Judge, George Allen and Unwin, Sydney, 1984, p. 277;
Sir John Latham, ‘Interpretation of the Constitution’, in R. Else-Mitchell
(ed.), Essays on the Australian Constitution, Law Book Co., Sydney,
2nd ed. 1961, p. 24.
- Geoffrey Sawer, Australian Federal Politics and Law 1901–1929,
Melbourne University Press, Melbourne, 1956, p. 329.
- Huddart, Parker and Co Pty Ltd v Moorehead
(1909) 8 CLR 388.
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Steamship Co Ltd (1920) 28 CLR 129.
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Australia’s Constitutional System of Government, Cambridge University
Press, Melbourne, 1995, p. 34.
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(1971) 124 CLR 468; Peter Prince and Thomas John, ‘The Constitution
and industrial relations: is a unitary system achievable?’, Research
Brief, no. 8, Parliamentary Library, Canberra, 2005–06.
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CLR 465.
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[2006] HCA 52; George Williams, ‘Goodbye to states’ rights’, Age,
15 November 2006.
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to Canberra’, Sydney Morning Herald, 15 November 2006.
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1961, in
E. G. Whitlam, Labor and the Constitution, Victorian Fabian Society
Pamphlet 11, 1965, p. 33.
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1957, in Whitlam, op. cit., p. 5.
- ibid., p. 21.
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Australian Fiscal Federalism from Whitlam to Keating, Centre for
Strategic Economic Studies, Victoria University of Technology, Melbourne,
1997, Table 4.1, p. 88.
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University of Queensland Press, St Lucia, 1984, p. 252.
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Speech of the Leader the Opposition, Rt Hon. R. G. Menzies, 10 November
1949, pp. 36–37.
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Prime Minister, Viking, Ringwood, 1997, pp. 53–54.
- John Garnaut and Matt Wade, ‘States told to drop taxes’, Sydney
Morning Herald, 12 April 2005; Steketee, op. cit.
- Breaking the Gridlock. Towards a Simpler
National Workplace Relations System Discussions Papers 1–3, Canberra,
2000.
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wagon’, The Australian,
22 July 2005.
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unis’, Age, 22 March 2006.
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Australians Luncheon’, Sydney, 26 June 2006.
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Issue 1, September 2005, p. 9.
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30 June 2003.
- Sean Parnell and Nigel Wilson, ‘States cave in to Howard on training
deals’, The Weekend Australian, 27–28 August 2005.
- Lenore Taylor, ‘Ungovernable Australia’, Australian Financial Review,
19 June 2004.
- For example, Kevin Rudd, ‘The Case For Cooperative Federalism’, address
to Don Dunstan Foundation—Queensland chapter’, 15 July 2005.
- Brad Norington and Samantha Maiden, ‘Fix up IR or rates will soar:
Costello’, The Australian, 8 February 2005.
- Greg McIntosh, ‘Caring for the Kids. Commonwealth Funding for Child
Care’, Research Note, no. 18, Parliamentary Library, Canberra,
2003–04.
- Graham Young, ‘Yet another Opposition haircut’, Sunday Mail,
27 August 2006.
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literacy performance: what does research suggest for classroom practice?’
(2002), http://www.faess.jcu.edu.au/downloads/Henderson,
accessed on 1 August 2006.
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towards national consistency’, Media Release, 13 May 2005.
- David Rood, ‘Early school start “not in best interests of students”’,
Age, 4 July 2006.
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Standing Committee on Environment and Heritage, Sustainable Cities,
Canberra, August 2005, p. 11.
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quoted, ibid, p. 24.
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Federation. A New Contract for Federal-State Relations, Melbourne,
2006, pp. 10, 12, 25.
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Law and Theory. Commentary and Materials, Federation Press, Sydney,
4th ed. 2006, p. 904.
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(1936) 55 CLR 608; P. H. Lane, A Digest of Australian Constitutional
Cases, LBC Information Services, Sydney, 5th ed. 1996, p. 134.
- Commonwealth v Tasmania (1983)
158 CLR 1.
- Sir Daryl Dawson, ‘The Constitution—Major Overhaul or Simple Tune-up?’,
Melbourne University Law Review, vol. 14,
1983–1984, p. 358.
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of the States, Government Printer, Melbourne, 1998, p. 17.
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Crisis, Angus and Robertson, Sydney, 1975, pp. 47–52.
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Natural Disaster Relief Arrangements, http://www.dotars.gov.au/disasters/ndra/index.aspx,
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in the 1990s, Cambridge University Press, Melbourne, 1998, p. 23.
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be federalists: a response to Maddox’, Democratic Audit of Australia,
Australian National University, 2003, http://democratic.audit.anu.edu.au/papers/20030108_parkin_fed.rtf,
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vol. 21, no. 2, Winter 2005, p. 6.
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11 October 2006.
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2000, ABC Books, Sydney 2000, p. 10.
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31 July 2006; Hurst v state of Queensland [2006]
FCAFC 100.
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& Unwin, Sydney, 1999, p. 109.
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26 February, 2004, pp. 6684–86, 24 February 2005, pp. 14208–16,
5 May 2005, pp. 15763–66, 26 May 2005, pp. 16262–70.
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A Discussion Paper’, June 2006, p. 10.
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the Taskforce on Reducing Regulatory Burdens on Business, January
2006, p. 6.
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op. cit., pp. 7–9.
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accessed 31 August 2006.
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Getting on with the job’, Melbourne, 27 April 2005, p. 7; see also Richard
Webb, ‘The Commonwealth Government’s Role in Infrastructure Provision’,
Research Paper, no. 8, Parliamentary Library, Canberra, 2003–04.
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1988, Canberra, 1988, Volume 1, p. 439.
- ibid., pp. 19, 439.
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3 September 1988. The cases For and Against, Canberra, 1988,
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of Australian local government’, 24 November 1997, http://www.alga.asn.au/about/declaration.php,
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Share for Responsible Local Government, House of Representatives Standing
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2003, p. 11.
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Paper, no. 11, Parliamentary Library, Canberra, 2002–03, p. 31.
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April 1920, p. 1444. For a proposal to divide Australia into 97 regions,
see Commonwealth Department of Post-war Reconstruction, in conjunction
with State departments responsible for regional planning in each State,
Regional Planning in Australia. A History of Progress and Revenue of
Regional Planning Activities throughout the Commonwealth, Canberra,
1949.
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Angus and Robertson, Sydney, 1974, p. 300.
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accessed 11 August 2006.
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Review, 26 October 2004.
- ibid.
- Patrick Weller, ‘Governing and Politics in 2025’, Research Paper for
Business Council of Australia Scenario Planning Project, ‘Aspire
Australia 2025’.
- Wayne Goss, ‘Governance and Politics’, Business Council of Australia.
- Santoro, op. cit. p. 11.
- Steven Wardill, ‘Reform federal system’, Courier-Mail, 12 October
2006.
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