tag:theconversation.com,2011:/id/topics/federalism-white-paper-12297/articlesfederalism white paper – The Conversation2016-04-25T20:15:07Ztag:theconversation.com,2011:article/560812016-04-25T20:15:07Z2016-04-25T20:15:07ZIdeas for Australia: To really reform the federation, you must build strong bipartisan support<figure><img src="https://images.theconversation.com/files/117918/original/image-20160408-23938-1iljinr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Recent debates over federation reform confirm that the Turnbull government must map out a path and a plan.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p><em>The Conversation has asked 20 academics to examine the big ideas facing Australia for the 2016 federal election and beyond. The <a href="https://theconversation.com/au/topics/ideas-for-australia">20-piece series</a> will examine, among others, the state of democracy, health, education, environment, equality, freedom of speech, federation and economic reform.</em></p>
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<p>Every Australian prime minister since at least Robert Menzies has committed to an improved federal system. The Whitlam, Hawke, Howard and even Keating governments grappled with it, sometimes helped and sometimes hindered by the 50 or so premiers and chief ministers who have served over the last 30 years.</p>
<p>Kevin Rudd made the most noise about ending the <a href="http://www.smh.com.au/national/rudd-pledges-to-end-health-blame-game-20071001-11v4.html">“blame game”</a>. But his attempt at streamlining federal finances largely failed. Nothing was done to change the culture of federal and state governments pursuing a myriad of ad-hoc funding deals in major policy areas, often based on unsustainable income projections.</p>
<p>The scramble of responsibilities, finances, inefficiencies and buck-passing remained.</p>
<h2>The recent moves</h2>
<p>The first Rudd prime ministership also attempted to make the Council of Australian Governments (COAG) a true <a href="http://www.theaustralian.com.au/news/nation/rudd-harnesses-coag-workhorse/story-e6frg6nf-1111115166921">“workhorse of the nation”</a>. That too was unsustainable without more permanent institutions to support the collaborative frenzy.</p>
<p>Enter Tony Abbott’s historic commitment, in 2013, to developing a long-term policy strategy for a <a href="http://www.liberal.org.au/latest-news/2014/06/28/prime-minister-white-paper-reform-federation">reformed federation</a>. But it also suffered major setbacks, mostly of his own making.</p>
<p>Abbott undermined his own initiative by failing to consult the states when his first budget <a href="https://theconversation.com/premiers-demand-abbott-meet-them-insisting-he-has-got-his-budget-facts-wrong-26854">pulled back</a> on income and funding projections. He <a href="http://www.abc.net.au/news/2014-05-12/dozens-of-agencies-to-fall-under-federal-budget-axe/5445354">abolished the COAG Reform Council</a>, one of the few institutions helping to drive high-level co-operation.</p>
<p>The Abbott approach also suffered two other flaws. <a href="http://www.theaustralian.com.au/archive/national-affairs/prime-minister-tony-abbott-tells-states-its-time-to-do-more/story-fnmbxr2t-1226918424973">Its objective</a> of making each level “sovereign in its own sphere”, or creating clean lines of policy responsibility, was never realistic for major shared policy areas such as health, education and infrastructure. What was needed was clearer thinking on how the different roles within these fields should be shared and funded, rather than divvied up.</p>
<p>And while Abbott did succeed in starting a new reform conversation with both Labor and Coalition states in 2015, he never lifted a finger in pursuit of bipartisanship on federal reform at the federal level itself.</p>
<p>Enter Malcolm Turnbull, and the apparent debacle over reforms to give the states <a href="http://www.smh.com.au/federal-politics/political-news/coag-premiers-reject-malcolm-turnbulls-push-to-allow-states-to-levy-income-tax-20160401-gnw4pc.html">more control</a> over income tax. An apparent debacle, because the outcome was logical and historic.</p>
<p>And enter too the latest data on how federal reform <a href="https://www.griffith.edu.au/business-government/centre-governance-public-policy/research-programs/federalism,-regionalism-and-devolution">is seen</a> across the political parties, and federal and state parliaments.</p>
<p>This snapshot of the views of 201 MPs, across all parliaments and parties, was collected from September 2015 to January 2016. The results show why federation reform will not go away. Like the community, most federal and state MPs agree federation reform is important, irrespective of their political persuasion. </p>
<p>Fortunately, the recent debates confirm that the Turnbull government knows it must map out a path forward, however difficult this may be.</p>
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<a href="https://images.theconversation.com/files/118071/original/image-20160411-23638-1uqwsrg.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/118071/original/image-20160411-23638-1uqwsrg.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/118071/original/image-20160411-23638-1uqwsrg.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/118071/original/image-20160411-23638-1uqwsrg.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/118071/original/image-20160411-23638-1uqwsrg.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/118071/original/image-20160411-23638-1uqwsrg.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=506&fit=crop&dpr=1 754w, https://images.theconversation.com/files/118071/original/image-20160411-23638-1uqwsrg.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=506&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/118071/original/image-20160411-23638-1uqwsrg.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=506&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<h2>How to do reform?</h2>
<p>Views diverge dramatically on both party lines and federal-versus-state lines on where to focus for solutions, or what the eventual outcomes should be.</p>
<p>When asked about the importance of different areas of reform, Coalition MPs at both levels are more likely than Labor MPs to nominate reform of the roles and responsibilities of the different levels. This helps explain the Abbott “clean lines” instinct.</p>
<p>By contrast, Labor MPs – especially federal ones – are more likely than their Coalition counterparts to prioritise intergovernmental co-operation. This is consistent with Labor’s history of trying to make the whole scramble deliver, rather than trying to make it less of a mess.</p>
<p>Federal Labor MPs are also less likely to want to back out of state affairs, and remain more likely to support abolishing or replacing the states.</p>
<p>But, importantly, abolishing or replacing the states is not just a Labor dream. It is supported by 28% of federal Coalition respondents and 17% of state and territory respondents. As recorded by successive <a href="https://app.secure.griffith.edu.au/news/2014/10/10/latest-constitutional-values-survey-released/">Australian Constitutional Values surveys</a>, 25% of the wider community agree.</p>
<p>Perceptions differ massively as to how the federation should be reformed. However, more than 70% of Australians and at least 60% of every group of MPs would prefer to have something other than what we have now, irrespective of party or level.</p>
<p>These longer-term aspirations confirm that we can’t simply throw up our hands and leave federation reform alive and kicking – but unresolved – in the too-hard basket.</p>
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<a href="https://images.theconversation.com/files/118072/original/image-20160411-25920-tjpywn.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/118072/original/image-20160411-25920-tjpywn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/118072/original/image-20160411-25920-tjpywn.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=413&fit=crop&dpr=1 600w, https://images.theconversation.com/files/118072/original/image-20160411-25920-tjpywn.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=413&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/118072/original/image-20160411-25920-tjpywn.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=413&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/118072/original/image-20160411-25920-tjpywn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=519&fit=crop&dpr=1 754w, https://images.theconversation.com/files/118072/original/image-20160411-25920-tjpywn.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=519&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/118072/original/image-20160411-25920-tjpywn.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=519&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<h2>What can be done now?</h2>
<p>Even if federal Labor and the Coalition have fundamental differences on how the federation should work and be reformed – and it seems they do – we can, and must, move on the areas of common ground.</p>
<p>The survey shows the best common ground is to reform financial relationships so the inefficiencies, gaming and uncertainties are reduced. In the present system, the federal government collects almost all the money, but the Federation depends on massive proportions being laundered back to the states.</p>
<p>When it comes to financial reform, there are a range of possible answers. One is getting the states to raise more of their own revenue. The support for this among Coalition members, federal and state, explains why Turnbull’s recent proposal was not just a mere thought bubble, but a genuine option.</p>
<p>That option is <a href="http://www.news.com.au/finance/economy/australian-economy/malcolm-turnbull-ends-big-week-of-ideas-boom-with-coag-fizzer/news-story/bc038ae6cdadcfb3077b45e313447175">now dead</a>, and for good reason. Australian citizens, business and government like having a system that is flexible but also simple; which supports the community and economy by helping those who need it, but in which everyone is fundamentally equal.</p>
<p>This can be seen in strong support for fiscal equalisation. Taxes on individuals and business should be uniform, but the revenue generated should be distributed so that those who genuinely need it less are helping those who need it more.</p>
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<a href="https://images.theconversation.com/files/118073/original/image-20160411-25920-168l1ob.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/118073/original/image-20160411-25920-168l1ob.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/118073/original/image-20160411-25920-168l1ob.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=383&fit=crop&dpr=1 600w, https://images.theconversation.com/files/118073/original/image-20160411-25920-168l1ob.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=383&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/118073/original/image-20160411-25920-168l1ob.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=383&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/118073/original/image-20160411-25920-168l1ob.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=481&fit=crop&dpr=1 754w, https://images.theconversation.com/files/118073/original/image-20160411-25920-168l1ob.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=481&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/118073/original/image-20160411-25920-168l1ob.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=481&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<p>But where the most recent COAG meeting ended up, and the next phase of the Turnbull and/or Bill Shorten reform process needs to go, is in making the system clearer and more sustainable by redistributing federally collected funds in a more fixed, guaranteed, accountable way.</p>
<p>This is the principle with the most consistent support across all types of parliaments and parties. It may not be the reform that everyone sees as most important, but it provides the strong common ground which is vital in making other reforms possible.</p>
<p>There is much to be done. All the other issues – clearer roles and responsibilities, better accountability to the community, more effective support for intergovernmental collaboration, more clarity and resources for local and regional levels of governance – still have to be tackled.</p>
<p>But the crucial thing is that we keep going, even if the odd stumble is inevitable. This is why commitment to a stronger, ongoing and more bipartisan federal reform process – one that not only continues but upgrades the effort to shape a better Federation – remains one of the true tests of modern-day Australian political leadership.</p>
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<p><em>You can read other articles in the series <a href="https://theconversation.com/au/topics/ideas-for-australia">here</a>.</em></p>
<p><em>Find out more about the way forward at the upcoming national conference <a href="http://www.griffith.edu.au/sir-samuel-griffith-legacy-series">A People’s Federation for the 21st Century?</a> in Brisbane on June 16-17.</em></p><img src="https://counter.theconversation.com/content/56081/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>A J Brown receives funding from the Australian Research Council, as well as other partner organisations under Australian Research Council Linkage Projects. He is also a member of the board of directors (non-remunerated) of Transparency International Australia. </span></em></p>Commitment to a stronger, ongoing and more bipartisan federal reform process is one of the true tests of modern political leadership.A J Brown, Professor of Public Policy & Law, Centre for Governance & Public Policy, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/441412015-07-15T02:42:47Z2015-07-15T02:42:47ZForget health takeovers, here’s how to fix hospital funding and chronic disease care<figure><img src="https://images.theconversation.com/files/88275/original/image-20150713-11795-chueho.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Public hospital funding is in a critical condition.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-280536563/stock-photo-empty-hospital-cot-in-a-corridor.html?src=mCMExOTXOnVDqrAEYkstyA-1-139">Anna Jurkovska/Shutterstock</a></span></figcaption></figure><p>After a shaky start, the Commonwealth government is finally starting a debate about how Australia’s future health system should look. Next week, the prime minister and premiers will <a href="https://www.coag.gov.au/sites/default/files/COAG%20Communique%2017%20April%202015.pdf">meet to discuss</a> some big reform options, such as a radical centralisation or devolution of health care. It looks like Treasurer Joe Hockey <a href="http://www.afr.com/news/politics/raise-the-gst-and-fund-yourselves-treasurer-joe-hockey-to-tell-states-20150714-gibked">will ask the states</a> to take responsibility for their budgets and wholly fund public hospitals. </p>
<p>But don’t bet on radical, single-level-of-government health takeovers. History suggests that proposals to shift health responsibilities are likely to languish in the Department of Prime Minister and Cabinet’s <a href="https://federation.dpmc.gov.au/publications/discussion-paper">draft federalism green paper</a>, which was leaked then released last month.</p>
<p>Public hospitals and chronic care both need serious reform, but there are more realistic ways to achieve it. Demand for hospital services has grown rapidly and public hospitals have <a href="https://www.acem.org.au/getattachment/a66b1406-53d1-4c9e-a064-c62bc90e3bd5/S47-Statement-on-Ambulance-Diversion.aspx">struggled</a> to keep up. In the community, people with chronic diseases receive <a href="https://theconversation.com/time-for-policy-rethink-as-frequent-gp-attenders-account-for-41-of-costs-38966">fragmented care</a> from separate and disconnected providers. </p>
<p>Successful change in these areas requires the right funding structures and incentives. The green paper contains two ideas that could work and these should be the focus of the leaders’ discussions on health.</p>
<h2>Public hospital funding</h2>
<p>Australia’s health funding system is mostly an accident of history. The Commonwealth has ended up the major funder of medical practice outside hospitals, and states are responsible for managing and planning public hospitals. </p>
<p>The Commonwealth, however, contributes about 40-45% of public hospital costs and can, as it did in the 2014 budget, <a href="https://theconversation.com/budget-takes-hospital-funding-arrangement-back-to-the-future-26701">slash its contribution at whim</a>. The 2014 budget shredded the Commonwealth’s previously bipartisan commitment to share the costs of growth in hospital services, reverting to a formula based on state populations.</p>
<p>One idea in the federalism green paper improves on the previous bipartisan commitment in the <a href="http://www.federalfinancialrelations.gov.au/content/npa/health_reform/national-agreement.pdf">2009 National Health Reform Agreement</a>. It proposes a Hospital Benefit Schedule. Like the <a href="http://www.mbsonline.gov.au/internet/mbsonline/publishing.nsf/Content/Home">Medicare Benefits Schedule</a>, which sets the fees for GP visits and procedures, a Hospital Benefits Schedule would set the level of Commonwealth funding for public and private hospital services. </p>
<p>The change could produce a welcome return to shared incentives by exposing both the Commonwealth and states to the cost of growing demand for hospital care. </p>
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<img alt="" src="https://images.theconversation.com/files/87744/original/image-20150708-31595-967a9l.jpg?ixlib=rb-1.1.0&rect=1202%2C579%2C3693%2C2528&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/87744/original/image-20150708-31595-967a9l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/87744/original/image-20150708-31595-967a9l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/87744/original/image-20150708-31595-967a9l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/87744/original/image-20150708-31595-967a9l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/87744/original/image-20150708-31595-967a9l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/87744/original/image-20150708-31595-967a9l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Commonwealth contributes about 40-45% of public hospital costs and can slash its contribution at whim.</span>
<span class="attribution"><a class="source" href="http://one.aap.com.au/">Nikki Short/AAP</a></span>
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<p>However, a few criteria need to be met. First, a new Hospital Benefits Schedule should give both sides good reason to keep growth in hospital services under control. </p>
<p>Under the changes in the 2014 Budget, the Commonwealth’s payments to states for hospitals are unrelated to growth in public hospital costs. Because of this, the Commonwealth now has less reason to fund primary care, which keeps people healthy and out of hospital. It’s already cut back funding for primary care through a <a href="https://theconversation.com/high-cost-of-gp-rebate-freeze-may-see-co-payments-rise-from-the-dead-38786">freeze</a> to the Medicare Benefits Schedule.</p>
<p>In effect, the Commonwealth is shifting some costs onto public hospitals, where states bear more of the burden. In response, the states can be expected to fight back, shifting costs the other way. </p>
<p>States can (and do) bill hospital services to the <a href="http://www.mbsonline.gov.au/internet/mbsonline/publishing.nsf/Content/Home">Medicare Benefits Schedule</a>, so that the Commonwealth picks up the tab. But there would also be problems if the states paid too little for hospitals. They would be free to build vote-winning hospitals without worrying too much about whether they are run efficiently or used unnecessarily. </p>
<p>As well as having skin in the game, both sides need more certainty about how public hospitals will be funded. Health systems can’t be planned and managed well if hospital funding agreements can be unilaterally revoked, as happened last year. The new Hospital Benefits Schedule should be set and adjusted by an independent body, such as the <a href="http://www.ihpa.gov.au/">Independent Hospital Pricing Authority</a>. The funding split should be fixed over the medium term, say ten years, and locked in with legislation.</p>
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<span class="caption">If states contribute too little to hospital funding, there’s little incentive to ensure they run them efficiently.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/defenceimages/9183294751/">UK Ministry of Defence/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
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<p>Finally, the new shared and secure funding agreement should encourage efficiency. The current <a href="http://www.ihpa.gov.au/internet/ihpa/publishing.nsf/Content/national-efficient-price-determination-lp">pricing system</a> for hospital procedures essentially uses the average price across all hospitals. Including inefficient hospitals in this average lets wasteful practices drive up funding across the whole system.</p>
<p>The Grattan Institute’s 2015 report, <a href="http://grattan.edu.au/report/controlling-costly-care-a-billion-dollar-hospital-opportunity/">Controlling Costly Care</a>, shows that about A$1 billion a year could be saved by tightening up state pricing practices. The Hospital Benefit Schedule should use the same approach at the Commonwealth level. Instead of setting prices at the average cost across all hospitals, excessive and avoidable costs should be left out.</p>
<h2>Care for people with chronic illnesses</h2>
<p>A second key challenge facing our health system is how to improve the quality of care for people with chronic illnesses, and to do it at a <a href="https://theconversation.com/people-with-chronic-illness-short-changed-by-fragmented-system-federalism-paper-35393">reasonable cost</a>. </p>
<p>The current GP funding system pays for atomised, episodic care. The majority of payments are on a fee-for-service basis, rewarding GPs for visits instead of continuity of care, quality of care, or health outcomes. </p>
<p>General practice should be the cornerstone of good care, but people with chronic illnesses need a wide range of primary health services. When care for people with chronic illnesses isn’t multidisciplinary, patients will keep shuttling between different health care providers without a coherent health care plan. The result is waste from duplicated tests, treatments and appointments, and lower quality of care.</p>
<p>The federalism green paper proposes a funding solution to this problem. The Commonwealth and states would jointly fund “packages of care” for people with chronic diseases or complex conditions. The packages would cover GP visits, specialist appointments, hospital care and allied health care.</p>
<p>This option would also create a system of <a href="http://www.afr.com/news/policy/health/new-funding-model-for-gps-to-replace-copay-20150302-13sfzb">blended payments</a>, in which a doctor would receive some payments on a fee-per-service basis and some for looking after a patient for over a year, or even for achieving health outcomes. The approach is being tried in <a href="http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361085/">many other countries</a>, although the evidence on its effectiveness is <a href="http://hsr.sagepub.com/content/6/1/44.short">not yet clear</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/87737/original/image-20150708-31604-je1wkl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/87737/original/image-20150708-31604-je1wkl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/87737/original/image-20150708-31604-je1wkl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/87737/original/image-20150708-31604-je1wkl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/87737/original/image-20150708-31604-je1wkl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/87737/original/image-20150708-31604-je1wkl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/87737/original/image-20150708-31604-je1wkl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Care for people with chronic illnesses must be multidisciplinary.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/dfid/16768375614/">DFID/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Pooling Commonwealth and state funding could help promote seamless, coordinated health care. Blending payments seems like a good way to focus health care professionals on helping patients look after their health between visits. But the green paper is not clear about how these new packages would be managed.</p>
<p>The new <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/primary_Health_Networks">Primary Health Networks</a>, which took on their responsibilities on July 1, could manage these packages of care. To do it well, the networks should be neutral, allocating both Commonwealth and state funding without belonging to one level of government. </p>
<p>By coordinating chronic disease packages, Primary Health Networks can be built up and tested. If a few participating networks demonstrate good outcomes from pooling funding for people with chronic disease, the approach can be expanded to other types of patient. </p>
<p>Eventually, Primary Health Networks might purchase all the primary and outpatient care in their region. But before contemplating this scenario (an option the green paper raises), they should build their capacity and demonstrate their worth on a more modest scale.</p>
<p>Remaking the federation was never going to be easy. But rather than trying to do the impossible, the prime minister and premiers should focus on two options that point to a better future and that have a half-decent chance of actually happening.</p><img src="https://counter.theconversation.com/content/44141/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Duckett has received funding from the Australian Research Council and the National Health and Medicare Research Council to examine aspects of hospital funding. He is a consultant to the Independent Hospital Pricing Authority and a member of a number of its committees.</span></em></p><p class="fine-print"><em><span>Peter Breadon does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Any health reform proposals should start by addressing public hospitals and chronic care. But successful change in these areas requires getting the state-Commonwealth funding and incentives right.Stephen Duckett, Director, Health Program, Grattan InstitutePeter Breadon, Health Fellow, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/444102015-07-13T04:19:21Z2015-07-13T04:19:21ZLet the Constitution and democratic principle guide us to renew federalism<p>An exercise in <a href="https://theconversation.com/au/topics/renewing-federalism">reform of the Australian federation</a> is underway. <a href="https://federation.dpmc.gov.au/publications">Issues papers</a> have been published. A draft discussion paper <a href="https://theconversation.com/abbott-releases-federalism-paper-after-labor-ramps-up-scare-attack-43731">has been released</a>. The heads of government are <a href="http://www.theaustralian.com.au/national-affairs/state-politics/jay-weatherill-has-four-point-plan-for-federation-overhaul/story-e6frgczx-1227432867056">scheduled to meet</a> to discuss it later this month.</p>
<p>This initiative follows years of mounting concern about the operation of federalism in Australia. These concerns should not be overstated: it is meaningless, for example, to describe the federation as “broken”. There is no doubt, however, that it is underperforming.</p>
<p>The present initiative offers an opportunity for reform that should be seized in a way that makes a difference.</p>
<h2>What are the problems?</h2>
<p>The problems with which federalism reform must deal include:</p>
<ul>
<li><p>the complexity, duplication and serious accountability deficit caused by the labyrinth of intergovernmental arrangements;</p></li>
<li><p>the over-concentration of power in the executive branch, at both levels of government, to which federalism as it presently operates makes a major contribution;</p></li>
<li><p>the wild policy swings in areas of state as well as Commonwealth responsibility, caused by changes of federal government; and</p></li>
<li><p>the waste of potential, in terms of diversity, policy innovation, responsive government and public engagement, which is the cost of underperforming federalism.</p></li>
</ul>
<p>Many attempts have been made over the years to tackle some of these problems. Most have involved not much more than a tweak here and there. It is telling that the <a href="http://www.federalfinancialrelations.gov.au/content/intergovernmental_agreements.aspx">Federal Financial Relations Agreement</a> and the <a href="http://webcache.googleusercontent.com/search?q=cache:N6VmPnqloWYJ:archive.coag.gov.au/coag_meeting_outcomes/2006-02-10/index.cfm+&cd=2&hl=en&ct=clnk&gl=au">creation</a> of the Council of Australian Governments (COAG) Reform Council were held out as major steps forward. Neither had any significant effects; neither proved lasting.</p>
<h2>Answers lie in coming to grips with federal democracy</h2>
<p>The common thread that would enable us to deal with these problems collectively and coherently is democracy.</p>
<p>In a democratic state, we necessarily accept that democracy is the key to good government, in the sense of government that improves the lives of its people through policies that suit the circumstances on the ground. In a state in which democracy primarily takes effect through representation in parliament, the lines of accountability for efficient and effective government run through those parliaments to the people. </p>
<p>Parliaments have the additional democratic advantage of providing a public forum in which dissenting voices can be heard, even if they do not prevail. Their decisions are matters of public record.</p>
<p>If the state also is a federal state, as in Australia, that makes a difference. But the difference is not to make democracy irrelevant or to justify by-passing parliaments. On the contrary, it makes it necessary to come to grips with what democracy involves in a federation or, in other words, with federal democracy. </p>
<p>In a sense, this is democracy plus, insofar as it offers representative and accountable government at two levels. When each level of government is exercising its own responsibilities it must do so through the usual democratic forms. </p>
<p>But when governments pool their authority, horizontally or vertically, as in federations they sometimes need to do, the additional challenge of federal democracy is to find ways of ensuring that co-operation achieves its goals without eroding democratic principle and practice.</p>
<h2>Constitution provides a solid framework</h2>
<p>The <a href="http://www.aph.gov.au/About_Parliament/Senate/Powers_practice_n_procedures/Constitution">Australian Constitution</a> sets up the framework for federal democracy surprisingly well, at the level of principle.</p>
<p>It divides responsibility by reference to what it has become fashionable to describe as the principle of <a href="https://theconversation.com/rebalancing-government-in-australia-to-save-our-federation-33365">subsidiarity</a>. Commonwealth powers, as now broadly interpreted, for the most part are suitable for a national sphere of government. Powers not assigned to the Commonwealth, including education, hospitals, housing, urban infrastructure, windfarms and school chaplains, are by and large suitable for exercise by the states, the problem of the fiscal imbalance aside.</p>
<p>The Constitution provides mechanisms for co-operation that involve the parliaments and are broadly compatible with democratic principle. These include the <a href="https://en.wikipedia.org/wiki/Section_51(xxxvii)%20_of_the_Australian_Constitution">reference power</a>, the <a href="https://en.wikipedia.org/wiki/Section_96_of_the_Constitution_of_Australia">grants power</a> and the power to make <a href="http://www.aph.gov.au/binaries/library/pubs/rn/2001-02/02rn43.pdf">agreements in relation to borrowing</a>.</p>
<p>The Constitution assumes that each level of government will raise taxes for its own purposes. But it also recognises the possibility of a fiscal imbalance, leaving the Commonwealth with tax sources that exceed its own proportionate expenditure needs. It <a href="http://www.austlii.edu.au/au/legis/cth/consol_act/coaca430/s94.html">describes this</a> as a “surplus” to which the states are entitled on such basis as is deemed “fair”.</p>
<p>This provision quickly became a dead letter, through political practice and judicial interpretation. What is relevant for present purposes, however, is that it provides a principle that has considerable contemporary relevance to the problem of the <a href="https://theconversation.com/renewing-federalism-what-are-the-solutions-to-vertical-fiscal-imbalance-31422">fiscal imbalance</a>.</p>
<h2>Let democratic accountability guide reform</h2>
<p>If we used federal democracy, thus understood, as the framework for federalism reform, it would have the following implications.</p>
<p>As a starting point, each level of government would take primary responsibility for the exercise of its own constitutional powers, through the usual democratic forms.</p>
<p>When collaboration is said to be needed, the need should be identified and the collaboration structured so that it is fit for the purpose. It should also be designed to minimise the impact on democratic accountability, thus also maximising the chances of effective outcomes.</p>
<p>Collaboration should take effect through transparent intergovernmental machinery, capable of supporting it as a shared enterprise. A successor to <a href="https://www.coag.gov.au/">COAG</a> should be serviced by an independent secretariat, on which all participating governments can rely.</p>
<p>Proceedings, including both inputs and outcomes, should be publicly available. Participants should be accountable to their cabinets, their parliaments and their people for the stance that they, respectively, take. Parliaments should be involved in major decisions, at a formative stage.</p>
<p>The fiscal imbalance should be managed so as to remove its distorting effects. This might be done by giving the states access to additional tax sources, for which the Commonwealth should make room. </p>
<p>If that is considered a bridge too far, we should acknowledge that the current imbalance is merely a matter of convenience and that the states are entitled to a share of revenue raised by the Commonwealth by reference to the concept of surplus, determined by a transparent means. Either of these solutions requires each government to be responsible to its own people for the expenditure on its own responsibilities.</p>
<p>The spirit, as opposed to the letter, of federal democracy has other implications as well. It demands respect between levels of government, as representatives of the Australian people. Respect and trust in turn should carry consequences for the quality and shelf-life of key agreements.</p>
<p>Federal democracy also should be understood as a repudiation of centralisation for its own sake, not only at the Commonwealth level but in state capitals as well. It imports a commitment to extending the principles of subsidiarity and democratic accountability further to more local levels, including Indigenous communities, which also are entitled to respect, for the same reasons.</p>
<h2>Only principled democratic reform will work</h2>
<p>Federalism reform along these lines would require commitment to pursue. The current problems are of long standing. Habits, attitudes and interests have become entrenched. </p>
<p>There is no other effective solution, however. Any other approach will deliver more of the same. If we do not deal with these problems now, we will be talking about them again in another five or ten (wasted) years.</p>
<p>The draft <a href="https://federation.dpmc.gov.au/publications/discussion-paper">discussion paper</a> released towards the end of June identifies many of the problems that federalism reform should tackle. But it offers almost no real guidance about what to do and why.</p>
<p>The discussion paper’s reasoning is inconsistent. It does not lead to clear conclusions, or even to clear choices, leaving outcomes to horse-trading at best. It is too opaque to encourage the public comment that it purports to seek.</p>
<p>Nor does it pay any regard at all to the relevance of functioning federalism to Australian democracy, and vice versa. Accountability is conceived in purely bureaucratic terms. COAG and all its accoutrements are described as “back office” arrangements, of no interest to the Australian public, despite their centrality to the Australian system of government.</p>
<p>That is the way in which federalism has been treated in the past. But the past has not served us well in this regard. If we have the necessary vision and fortitude, federalism reform through the lens of democracy has the potential to strengthen both.</p>
<hr>
<p><em>Cheryl Saunders and Jonathan Green will discuss the principles that should underpin reform of Australian federalism in the 2015 <a href="http://www.eventbrite.com.au/e/the-2015-john-button-oration-tickets-17561268226">John Button Oration</a> on July 14 at 6.30pm.</em></p><img src="https://counter.theconversation.com/content/44410/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cheryl Saunders receives funding from the Australian Research Council.</span></em></p>The federalism discussion paper is out and the prime minister has called a leaders’ ‘retreat’ to consider it. They should build on the Constitution’s democratic principles to make the federation work better.Cheryl Saunders, Laureate Professor, Melbourne Law School, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/357142015-01-07T19:23:46Z2015-01-07T19:23:46ZFederal government to take a back seat in education?<p>Released two days before Christmas, you could be forgiven for missing the issues paper on government roles and responsibilities in education that is part of the process in developing the <a href="https://federation.dpmc.gov.au/">federalism white paper</a>. This is a pity. Because if you wanted insights into the Commonwealth government’s attitude to federalism in education and potential directions this could take, it’s a good place to start.</p>
<h2>Schooling policy best left to the states?</h2>
<p>As the paper makes clear, Australian early childhood and schooling policy are complex labyrinths of overlapping funding and policy responsibilities. This reflects the ad hoc way they have developed over the last 150 years and especially last few decades. It recognises that while not all the pressures and challenges in these spheres result from overlapping government roles, they can exacerbate problems, and clarification could lead to improvements. </p>
<p>The paper asks readers and stakeholders to consider a number of key principles when considering the allocation of roles and responsibilities in relation to issues such as accountability, equity, efficiency, the national interest, and fiscal sustainability. </p>
<p>It’s clear where the government stands. Most of the questions in the schooling section about the degree of overlapping government roles or desirability of Commonwealth involvement are at best Dorothy Dixers or leading questions, for which the pre-empted answer is partial or complete Commonwealth retreat from the policy space. For instance, it asks:</p>
<blockquote>
<p>What benefits, or costs, would arise from assigning full responsibility for school education to the States and Territories?</p>
</blockquote>
<p>It answers below:</p>
<blockquote>
<p>In general, the national interest will be best served through subsidiarity [responsibility given to the least centralised authority].</p>
</blockquote>
<p>The issues paper repeatedly outlines complexities associated with the different funding arrangements for government and non-government schools and the arguments against Commonwealth involvement in schooling. Instead, it says that:</p>
<blockquote>
<p>… states and territories […] arguably ought to have primary carriage of schooling policy for all the schools in their jurisdiction. </p>
</blockquote>
<p>Only rarely does it provide a counter argument for retaining or increasing such involvement. </p>
<p>Importantly (and unusually for a document emanating from the prime minister’s department) it explicitly and repeatedly states that the presence of national interest does not necessarily require policy uniformity or Commonwealth leadership. </p>
<p>The paper also hints that the Commonwealth is considering downgrading its role in the national curriculum and assessment body, <a href="http://www.acara.edu.au/default.asp">ACARA</a> and the Australian Institute for Teaching and School Leadership (<a href="http://www.aitsl.edu.au/">AITSL</a>), which it says duplicate the work of the states and territories. </p>
<p>It says the Commonwealth has already played its role in the creation of these national education agencies and architecture (such as NAPLAN and the national curriculum) and this work could now be maintained by the states and the territories. </p>
<h2>What for early childhood?</h2>
<p>By contrast, on early childhood the government is much less clear about what it considers the best path forward. </p>
<p>In recent years, the sector has rapidly expanded and undergone dramatic upheavals. This has led to a proliferation of different services and regulatory frameworks that are difficult for parents and service providers to navigate. </p>
<p>The paper recognises the need for early childhood care to involve quality educational programs by qualified staff. The issues paper hints that fees, already increasing almost <a href="https://federation.dpmc.gov.au/">8%</a> annually, may have to increase further to meet the growing demand for places and quality programs. This is despite governments increasing their expenditure on childcare and early learning by <a href="https://federation.dpmc.gov.au/">80%</a> in real terms since 2007-08.</p>
<p>The paper identifies the disconnect between stand-alone kindergartens (managed and funded by states and local governments), and kindergarten programs in formal daycare settings (which are mostly funded by the Commonwealth through childcare funding). Confusing matters further, both of these early childhood education services operate in two sets of regulatory and curriculum frameworks – state and Commonwealth. </p>
<h2>What can we learn from the issues paper?</h2>
<p>While major revisions to current roles and responsibilities are possible, the government has ruled out constitutional changes. This is a sensible move, given such changes are unnecessary. Major changes to our federal system occur through political, legal and cultural forces. This is essentially how our political system has transformed so radically since we became a federation 114 years ago. </p>
<p>The paper’s early conclusions are well-supported by research on federalism and education policy. This is but the first step in the process and it will be interesting to see how the government’s thinking evolves in the final report due in early 2016. </p>
<p>The conclusions suggest delivery and regulation of education services by the states and territories, complemented by national collaboration and information sharing, may be the best way to improve learning outcomes, enhance accountability, and ensure greater equity and efficiency.</p><img src="https://counter.theconversation.com/content/35714/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bronwyn Hinz has previously received funding for her research from the Australian Research Council, the University of Melbourne, the Comparative Education Society and the Education Foundation.</span></em></p>Released two days before Christmas, you could be forgiven for missing the issues paper on government roles and responsibilities in education that is part of the process in developing the federalism white…Bronwyn Hinz, Policy Fellow at the Mitchell Institute for Health and Education Policy (Victoria University) & PhD Candidate, School of Social and Political Sciences & Melbourne Graduate School of Education, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/333652014-10-26T19:09:03Z2014-10-26T19:09:03ZRebalancing government in Australia to save our federation<p>Federation in 1901 is now the middle point between 2014 and the arrival of the First Fleet in 1788. Despite this, most views of federation, if Australians have one at all, are probably shaped by its 19th-century imagery – dusty, whiskery elderly men in overly formal dress – rather than its 20th-century outcomes.</p>
<p>This is a shame. Behind the federation process in the 19th century was the political courage to undertake radical reform in pursuit of the opportunities created by new political and economic structures, as well as broader strategic concerns about Australia’s place in the world. </p>
<p>Despite being conceived in the 19th century, federation was a child of the 20th century. In a new report released today by the <a href="http://www.ceda.com.au/">Committee for Economic Development of Australia</a> (CEDA), I argue our challenge is to think of the next stage in its development and the opportunities that a new wave of reforms could create.</p>
<h2>The historic benefits of reform</h2>
<p>Federation has delivered enormous economic benefits. In an <a href="http://www.caf.gov.au/Documents/AustraliasFederalFuture.pdf">insightful analysis</a>, professors Anne Twomey and Glenn Withers usefully summarised the benefits as the “six Cs”:</p>
<ol>
<li><p>Checks on power: an effective federation protects the individual from an overly powerful government and ensures greater scrutiny of government action.</p></li>
<li><p>Choice in voting options: this ranges from the time-honoured tradition of people voting for one party at the national level and another at the state level to the choice to move between states.</p></li>
<li><p>Customisation of policies: federations allow policy customisation to meet the needs of people and communities across a large and increasingly diverse nation.</p></li>
<li><p>Co-operation: a joint approach to reform is encouraged. This means that proposals tend to be more measured and better scrutinised, which ultimately gives reform proposals greater legitimacy and potential for bipartisan support.</p></li>
<li><p>Competition: federations create incentives between states and territories to improve performance, increase efficiency and prevent complacency. Withers and Twomey showed that despite having an extra layer of government, federations have proportionately fewer public servants and lower public spending than unitary states. The total workforce employed in the entire public sector <a href="http://www.actu.org.au/Images/Dynamic/attachments/7837/Jobs%20Report%20-%20February%202013.pdf">has declined</a> over 30 years from 25% per cent to 16%.</p></li>
<li><p>Creativity: successful innovations in one state can be picked up by other states and policy failures avoided. For example, casemix funding, which has revolutionised the funding of hospitals, began in Victoria in the early 1990s and gradually extended to almost every other state and to the Commonwealth. In 2011, the savings were estimated at A$4 billion a year for an <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/22399F9147ACEF5DCA257BF0001D3A52/$File/Final_Report_November_2009.pdf">estimated annual expenditure</a> of about $10 million in maintaining the casemix system.</p></li>
</ol>
<p>To that list, you could also add Withers and Twomey’s assessments that:</p>
<ol>
<li><p>Federalism increased Australia’s prosperity by $4507 per head in 2006 dollars. This amount could be almost doubled if Australia’s federal system was more financially decentralised.</p></li>
<li><p>Countries with federal systems have tended to outperform unitary states over the last 50 years, even allowing for the intrinsic difficulties of comparison.</p></li>
</ol>
<p>It bears reiterating that the cost of government, measured as a share of gross domestic product (GDP), is <a href="http://dx.doi.org/10.1787/888932389873">lower in Australia</a> than in almost all comparable countries. It is reasonable to suppose that federation is at least partially responsible for successive Australian governments being able to offer relatively high levels of services to citizens at an internationally competitive cost.</p>
<p>Significantly, this cost is lower than in many unitary states, including the United Kingdom and New Zealand, giving the lie to the idea that state-level government is an intrinsic drag on an economy.</p>
<h2>The current state of progress</h2>
<p>My proposals are not based on the failure of Australia’s Federation. On the contrary, they are based on the opportunities that a new practice of government, within current political structures, could create.</p>
<p>In my career, I have seen this new practice of government emerge in both theory and practice. </p>
<p>One of the most striking aspects of the major economic and public sector reforms of the 1980s and 1990s was the degree to which they were driven through federation processes. Under Liberal and Labor premiers, Victoria advocated for, and helped drive, successive waves of the National Reform Agenda (NRA). The NRA established broad, measurable, strategic outcomes for state governments. </p>
<p>This was the basis for massively simplifying specific purpose payments from Commonwealth governments. These dropped from more than 90 to just six, with states having responsibility and a financial incentive for improving their performance. Australia owes Victorian premiers Jeff Kennett and Steve Bracks and NSW premier Nick Greiner a great debt for their work in pushing the Commonwealth into adopting the NRA. </p>
<p>The recent decision to <a href="http://blogs.crikey.com.au/croakey/2014/06/12/on-the-demise-of-the-coag-reform-council-who-will-hold-governments-accountable-for-health-outcomes/">abolish</a> the Council of Australian Governments Reform Council, which monitors states’ progress towards NRA goals, is a very retrograde step. The states will legitimately feel that they cannot rely on the Commonwealth to keep its word.</p>
<p>Central to this new practice of government is the idea of subsidiarity or devolution. Central governments should perform only those tasks that cannot be more effectively performed at an intermediate or more local level.</p>
<p>In operation, subsidiarity suggests that we should operate systems with associated political accountability through levels of government where the expertise lies. If state governments operate schools, for example, they should have the revenue to do that, without confusing the public through multiple levels of accountability. It also suggests that in the human capital area, the Commonwealth should confine itself to high-level regulation, the payment of benefits (such as pensions) and the publication of data on performance (such as My School).</p>
<p>In essence, we need to shatter the illusion that the Commonwealth is the “Swiss army pocketknife” of government in Australia. The state of aged-care services is a graphic example of the dangers of believing in that illusion. Conversely, the benefits of a subsidiarity approach are increasingly clear.</p>
<p>As already noted, casemix funding has substantially reduced growth in the cost of hospital services. Even the most cursory glance at the United States, which uses a market approach to providing health care, shows that Australia’s outcomes are achieved at considerably lower cost and with arguably greater social equity. The vast disparity in cost in the US between the same procedures done in different hospitals is <a href="http://www.vox.com/2014/6/11/5798558/four-maps-that-show-the-insanity-of-american-health-care-prices">well-documented</a>. This is hard to reconcile with the evangelical view of market efficiency advanced by some in Australia.</p>
<p>In education, states like Victoria have made a concerted effort to provide school councils and principals with greater autonomy. Debate continues about the exact role of increased autonomy in improving school outcomes, but a recent Victorian Competition and Efficiency Commission <a href="http://clearinghouse.aitsl.edu.au/Citations/bb6e1eb2-970c-4121-b3b4-a27300c1b5c4">report</a> found that what was crucial was the extent to which:</p>
<blockquote>
<p>… local decision making can activate the known drivers of educational improvement, including the quality of teaching and leadership.</p>
</blockquote>
<p>As a former director general of education, I can endorse assertion. It is also hard to believe that increased centralisation is the answer to meeting the diversity of needs of 880,000 students across 2200 schools.</p>
<p>Many of the reforms in Victoria were closely linked to international thinking from researchers like <a href="http://books.google.com.au/books/about/Reinventing_Government.html?id=7qyp_EcJuZoC">Osborne and Gaebler</a>. Their work was deeply influential on the Clinton administration in the US.</p>
<p>Three further observations support the benefits of subsidiarity:</p>
<ol>
<li><p>The Productivity Commission’s Blue Book, which compares the cost of service delivery across state jurisdictions, has shown that in Victoria, where devolution has been a long-term, bipartisan objective, per capita cost of <a href="http://www.pc.gov.au/__data/assets/pdf_file/0003/132339/rogs-2014-volumee-chapter10.pdf">hospitals</a> and <a href="http://www.pc.gov.au/__data/assets/pdf_file/0015/132306/rogs-2014-volumeb-chapter4.pdf">schools</a> has been lower than in most other states.</p></li>
<li><p>In aiming to improve outcomes for Indigenous Australians, which is one of Australia’s greatest systemic public policy failures, the greatest opportunities lie in the devolution of decision-making and accountability to local communities. They are best-placed to plan and shape service delivery in their local area.</p></li>
<li><p>Commonwealth departments have lost all capacity for effective interventions in large-scale service-delivery systems, such as schools and hospitals. </p></li>
</ol>
<h2>Opportunities to crack hardest policy nuts</h2>
<p>It is possible to see the stars aligning to use the subsidiarity principle to crack more of the hardest public policy nuts, including the long-term funding of transport infrastructure, schools and health care.</p>
<p>The Grattan Institute’s <a href="http://grattan.edu.au/home/australian-perspectives">recent reports</a> on the long-term budget challenges facing all levels of government describe the increasingly unfavourable economic headwinds that the Australian economy will face. In particular, they present two unpalatable truths that are evidence of a burning platform requiring a leap towards subsidiarity.</p>
<p>First, though not uncontested, increases in Australian government spending are being driven above all by health spending. This stems not from an ageing population but from the fact that people are seeing doctors more often, having more tests and operations, and taking more prescription drugs. </p>
<p>Second, claims of a “massive infrastructure gap” are not borne out by analysis of state and territory budgets. These have spent more on infrastructure in each of the past five years than in any comparable year since the Australian Bureau of Statistics first measured infrastructure spending in the 1980s.</p>
<p>We now have a conservative national government that is rooted in a philosophy that has traditionally been sceptical of centralisation. New information technology systems and analysis can now give political leaders greater confidence in local-level accountability. Internal government research shows that citizens intrinsically prefer, and rate more favourably, services that are planned and delivered at the local level.</p>
<p>Recent decisions of the High Court suggest that the judicial branch of government is also increasingly sceptical of centralisation. The decision in Williams No. 116 hints that the remedies for judicial dissatisfaction with the Commonwealth using executive authority to fund programs may go beyond a simple requirement for debate in parliament. Twomey <a href="http://www.vic.ipaa.org.au/news/january-2013/what-now-after-williams">has suggested</a> that one of the broader ramifications may be that the Commonwealth is forced to take a less “coercive” approach to negotiating with the states in areas such as education funding.</p>
<p>As I have <a href="http://onlinelibrary.wiley.com/doi/10.1111/1467-8500.12005/abstract">noted elsewhere</a>, it is also the case that our centralised system is becoming increasingly sclerotic. In part this is because of excessive ministerial office interference in service delivery and rapidly oscillating extremes in views about ministerial accountability. </p>
<p>One remedy is to be far more explicit about the division in accountability between ministers and public servants. That should include making ministerial advisers accountable in the same ways as public servants. Putting subsidiarity into practice also puts the “cookie jar” of service delivery further out of reach of advisers who often have no expertise in service delivery.</p>
<p>But the fundamental obstacle to change in our federation has been one of the world’s most severe cases of <a href="https://theconversation.com/renewing-federalism-what-are-the-solutions-to-vertical-fiscal-imbalance-31422">vertical fiscal imbalance</a>. Since the Second World War this has been our federation’s Achilles’ heel. Among other side-effects, it has encouraged state governments to develop what might be called a <a href="http://quoteinvestigator.com/category/willie-sutton/">“Willie Sutton”</a> mentality in which the Commonwealth is seen as the only source of revenue.</p>
<p>The truth is that the states prefer to go to the Commonwealth, rather than handle the more challenging task of gaining community support for generating the revenues needed to support the services they provide. This is really a matter of choice, not constitutional necessity. As the recent Commission of Audit highlighted, it is possible to imagine alternative funding systems that would shift this mindset.</p>
<h2>How might subsidiarity work in practice?</h2>
<p>The following examples are predicated on subsidiarity. In implementation, they would meet our growing demands for infrastructure and services, and reinvigorate our federation for the 21st century.</p>
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<figcaption><span class="caption">Terry Moran discusses the proposals raised in this article at the CEDA launch.</span></figcaption>
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<p>First, as the <a href="https://theconversation.com/commission-of-audit-report-released-experts-respond-26177">Commission of Audit</a> has suggested, the Commonwealth should walk its own talk on schools by assigning responsibility for schooling to the states and transferring an agreed share of income tax revenues to them for that purpose. This would also clean out the programmatic confetti that Commonwealth ministers have traditionally sprinkled across the education sector, to its great detriment. </p>
<p>There is also considerable merit in the broadly mooted proposal to increase the rate and coverage of the GST and transfer the extra revenue to the states to support growing demands on public hospitals.</p>
<p>Second, states should be encouraged to develop a land tax, or property charge, with a broader base of applicability but much lower rate than currently applies. Substantial portions of this new revenue stream should be hypothecated to transport improvements, particularly public transport.</p>
<p>Third, as the Productivity Commission <a href="http://www.pc.gov.au/__data/assets/pdf_file/0003/137280/infrastructure-volume1.pdf">cautiously suggested</a>, state governments could extend road-use charging to existing freeways, highways and major arterial roads within cities. This revenue would be hypothecated towards building and maintaining these classes of roads and availability-based payments to PPP consortia where needed for new roads. Fuel taxes collected by the Commonwealth could augment this road funding.</p>
<p>The community is legitimately angry about the idea of paying more for roads, when the original intention was that fuel tax would go towards this function. Transferring most of these tax revenues to the states could be part of a historic settlement to partition government roles in transport in favour of state and local governments. It would roll back the current process of the Commonwealth second-guessing other governments.</p>
<p>Having each major city pay this combination of property and road charges into its own funding pool would be a substantial step towards providing the infrastructure our cities need. These cities generate an enormous percentage of national wealth but their taxes effectively disappear into consolidated revenue at the Commonwealth level. </p>
<p>This approach would also provide the resources and legitimacy to fill one of Australia’s most pressing gaps in governance: city-wide planning of the sort that statutory bodies like the Melbourne and Metropolitan Board of Works once provided.</p>
<h2>Premiers can make history again</h2>
<p>None of this would be an easy political sell. It would need leadership capable of building a comprehensive political strategy, and a realistic communication plan that would help ordinary citizens understand that strategy. It would, however, play to what should be the strength of politicians: their ability to build alliances towards strategic objectives, rather than as micro-managing CEOs.</p>
<p>Devolution is a strategy that, in theory at least, has the capacity to create bipartisan consensus. As the reforms of the 1980s and 1990s show, this is a prerequisite for political acceptance and avoiding rollback by subsequent governments. As former prime minister John Howard remarked recently, successful reform requires the community to accept that it is fair and in the national interest.</p>
<p>This would be a major change in Australia’s practice of government. It would mean, among other things, a dramatically different role for the public service at the Commonwealth level. In modern terminology it would probably even be called “disruptive” or “transformational”. </p>
<p>It is striking that some of the core players in this transformation would be the state premiers, the same group who were central to the process that culminated 114 years ago. What we need now is a group of premiers who are interested in “saving” the Federation that their political predecessors helped create. They would do this by being the conduit through which more power and accountability flows into the local governance structures that states and local government are best suited to build and support.</p>
<p>For many years, the tide of funding and authorisation has flowed towards Canberra. As economic headwinds shift, this tide is turning and business as usual will increasingly struggle to make headway. </p>
<p>As Shakespeare reminds us in Julius Caesar, his play about political leaders contemplating change, a tide “taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries”.</p>
<p>We need political leadership prepared to ride with that tide.</p>
<hr>
<p><em>The CEDA report _<a href="http://www.ceda.com.au/research-and-policy/policy-priorities/federalism">A Federation for the 21st Century</a></em> will be launched by the Hon Nick Greiner AC, The Hon Justice Duncan Kerr Chev LH and Professor Terry Moran AC today in Sydney._</p><img src="https://counter.theconversation.com/content/33365/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Terry Moran has worked in the senior levels of the Victorian, Queensland and Commonwealth public services.</span></em></p>Federation in 1901 is now the middle point between 2014 and the arrival of the First Fleet in 1788. Despite this, most views of federation, if Australians have one at all, are probably shaped by its…Terry Moran, Vice-Chancellor's Professorial Fellow, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/313612014-09-16T20:26:09Z2014-09-16T20:26:09ZTaxation, the states, and redrawing our fiscal constitution<figure><img src="https://images.theconversation.com/files/58970/original/cmsfbqx7-1410743308.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">States must be able to lessen their reliance from the much larger Commonwealth. </span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-74454625/stock-photo-a-regular-sized-businessman-is-looking-at-the-giant-legs-of-a-competitor-digital-illustration.html?src=csl_recent_image-1">AndreaDanti/Shutterstock</a></span></figcaption></figure><p><em>The reform of Australia’s federation is under review. In this special series, we ask leading Australian academics to begin a debate on renewing federalism, from tax reform to the broader issues of democracy.</em></p>
<p><em>Curtin University’s Alan Fenna argues the Commonwealth must be prepared to relinquish its monopoly over personal and corporate income tax.</em></p>
<hr>
<p>It is hard to believe today, but the Constitution assigns the States powers over taxation almost equal to those of the Commonwealth. One wouldn’t know this for the simple reason that for well over half a century now, the Commonwealth and the High Court have ensured that the States cannot exercise those powers. </p>
<p>The result is that Australian federalism is crippled by an extraordinarily high degree of <a href="https://theconversation.com/renewing-federalism-what-are-the-solutions-to-vertical-fiscal-imbalance-31422">‘vertical fiscal imbalance’</a> (VFI). The Commonwealth has access to revenue far in excess of its needs and the States have service delivery responsibilities far in excess of their revenues. With money comes power, and with power comes endless interference.</p>
<p>In 1942, the Commonwealth used its “spending power” under s.96 to drive the States out of the income tax field. This was a cruel irony, given that s.96 was inserted to facilitate aid to the states. Meanwhile, the High Court has imposed an idiosyncratic interpretation of “excise” duties under s.90 that has made it impossible for the States to levy the kind of general sales taxes that their counterparts do in federations such as Canada or the United States. </p>
<p>The main direct and indirect tax bases are thus off limits to the states. They are left scrounging for revenue in economically inefficient or socially undesirable ways and going cap in hand to the Commonwealth. The Commonwealth has always responded by providing substantial “general revenue” grants to the States. Originally these were called “reimbursement grants” — implicitly acknowledging that the money was not really the Commonwealth’s. However, that terminology was eventually dropped and the arrangements were formalised in 1999 with the agreement to hypothecate the net revenue of the GST to the states. </p>
<p>At the same time, though, the Commonwealth developed a substantial appetite for conditional transfers. These are the “tied grants” that use the spending power to buy influence or control over extensive areas of State responsibility. Important reforms to the system of tied grants were implemented by the Rudd government in 2009; however, the underlying realities remained unaffected.</p>
<p>Many of the pathologies of Australian federalism can be traced back to this extreme degree of fiscal imbalance and the resulting dominance enjoyed by the Commonwealth. These include overlap and duplication; opportunistic intervention; excessive entanglement; one-size-fits-all programs and lack of policy diversity; blame shifting and obscured accountability; and the degree to which ‘cooperative federalism’ is a euphemism for Commonwealth hegemony. </p>
<p>Reforming Australia’s fiscal arrangements is thus the key to reforming Australian federalism.</p>
<p>The good news is that identifying a solution is not difficult. The first, and most obvious, measure is to broaden and deepen the GST — and reduce income tax take commensurately. The GST base could be broadened by removing the health and education exemptions, while the rate could easily be raised by at least 5%. This boost to the GST would provide two benefits simultaneously: increasing the general revenue flow to the states and reducing Australia’s excessive reliance on direct taxes. The second measure is to acknowledge that the income tax is not the exclusive privilege of the Commonwealth and legislate for a revenue-sharing arrangement. Under that arrangement the States would receive a set share of the personal and corporate income tax. These two taxes provide the great bulk of revenue in Australia. </p>
<p>The Abbott government’s National Commission of Audit recently likewise recommended restoring income tax access to the states, but they opted for base sharing rather than simple revenue sharing. Base sharing gives individual states the power to change rates and thus provides them with greater autonomy in the field. However, the postulated benefits of such a system would in all likelihood be outweighed by the counterproductive race to the bottom it would invite.</p>
<p>The bad news (though it’s hardly news) is that the obstacles to implementing such reforms are considerable — in no small part because the Commonwealth holds all the cards. However, the States are themselves partly to blame. In particular, they have failed to grasp recent opportunities to push for an increase in the GST, largely because of <a href="https://theconversation.com/gst-reform-a-golden-opportunity-soon-to-be-missed-by-the-states-26748">shortsighted and counterproductive opposition</a> to the equalising way in which the GST revenues are distributed. Ultimately they have no control over the GST: it is a Commonwealth tax that can be altered at any point by the Commonwealth. However, it is hard to see the Commonwealth wearing the odium of raising the GST just to improve the position of the States. </p>
<p>The real challenge, though, is to get the Commonwealth to relinquish its monopoly on the personal and corporate income tax. This might seem as impossible as it is reasonable. However, if the prime minister is dinkum about his <a href="http://www.pm.gov.au/media/2014-06-28/white-paper-reform-federation">commitment</a> to “clarify roles and responsibilities for States and Territories so that they are, as far as possible, sovereign in their own sphere’ and reduce ‘Commonwealth intervention”, then that is exactly what will happen. </p>
<hr>
<p><em>Renewing Federalism is in partnership with the Australian National University’s Tax and Transfer Policy Institute at the Crawford School of Public Policy and with the University of Melbourne School of Government.</em></p>
<p><em>Our Renewing Federalism series will culminate in a symposium on October 2 at ANU. If you would like to attend the event, please see event details and <a href="https://taxpolicy.crawford.anu.edu.au/events/4661/renewing-australian-federalism-starting-conversation">RSVP here</a>.</em></p>
<hr>
<p><strong>Read more in the series <a href="https://theconversation.com/au/topics/renewing-federalism">here.</a></strong></p><img src="https://counter.theconversation.com/content/31361/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Fenna receives funding from the Australia Research Council (ARC).</span></em></p>The reform of Australia’s federation is under review. In this special series, we ask leading Australian academics to begin a debate on renewing federalism, from tax reform to the broader issues of democracy…Alan Fenna, Professor of Politics, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/313732014-09-14T20:20:41Z2014-09-14T20:20:41ZRenewing Australian federalism<figure><img src="https://images.theconversation.com/files/58833/original/2pm37qyc-1410489625.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The way we are governed has changed radically from the world of the Constitutional founders.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/alegrya/6638970347/in/photolist-b7EszZ-b7EEZM-b7EwjV-8CGrYK-b7Ev8p-b7DZcn-dTVx2w-6EZu9V-7tb9mn-fEv6JT-bPdrAn-bPdome-bPdnTX-bAiLkd-bAiGAQ-7tf8r1-7tkXW4-7tpR7W-bPdiua-7tkS3Z-7tb5an-nTs4ve-62nCfU-odNkX6-ihND2e-oMWzp2-ovJqtx-oLbDUJ-oMWzfp-9o3Nc8-xauwm-7tfa1G-7teUj9-7tbdB4-xauVF-7teXGQ-7tb6zp-7taXTH-7tf5Cq-7teYVY-7tkQJn-7tbk8e-7teQKo-7t7ieD-7tpTe9-xauq8-oc5f5j-dV6u1v-ovHKm6-oNdxBr">Flickr/Alison Young</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p><em>The reform of Australia’s federation is under review, with a White Paper process currently underway. In partnership with the Australian National University’s Tax and Transfer Policy Institute at the Crawford School of Public Policy and with the University of Melbourne School of Government, we have asked leading Australian academics to begin a debate on renewing federalism, from tax reform to the broader issues of democracy.</em></p>
<p><em>Kicking off the series today, Professor Miranda Stewart considers what reform issues should be foremost.</em></p>
<hr>
<p>Australia is a country that benefits from great political and legal stability. We are, in 2014, one of the older and most stable federations in the world. Our short written Constitution, famously amended only <a href="http://www.peo.gov.au/learning/fact-sheets/australian-constitution.html">eight times</a> following successful referendums, still stands in the language of more than a century ago. To be honest, this can make debates about the federation seem pretty dull, and talk of changing how it all works seem unachievable.</p>
<p>But it would be wrong to assume that the law and norms that establish how we fund and run government are unchanged. In fact, Australia as a country, and the way we are governed has changed radically from the world of the Constitutional founders. </p>
<p>That change has taken place mostly without Constitutional amendment, and in response to changing popular demands for equality, welfare and redistribution, and changing economic circumstances globally and nationally.</p>
<p>The White Paper <a href="http://www.pm.gov.au/media/2014-06-28/white-paper-reform-federation">terms of reference</a> announced by Prime Minister Tony Abbott are wide-reaching, carefully reasoned and cover all the bases. They were generated in consultation with the States and Territories.</p>
<p>At bottom, the mood of the federal government, as well as the global and economic realities that Australia is facing in coming decades, are about cost. There are some important implications for all Australians in the White Paper terms of reference and most of them come down to your money - that is, to taxing, spending and democratic accountability for public provision by all levels of government.</p>
<p>First, taxes. The White Paper states the blunt challenge of “how to address the issue of State governments raising insufficient revenues from their own sources to finance their spending responsibilities”. While this implies that <a href="http://www.treasury.qld.gov.au/office/clients/commonwealth/intergovernmental/vertical-imbalance.shtml">vertical fiscal imbalance</a> is new, it has been an issue for <a href="http://www.hetsa.org.au/pdf/36-A-03.pdf">most of the last century</a>. </p>
<p>Our biggest and most effective taxes, the GST and income tax, are federal and should apply nationally - for efficiency and social equality reasons. State and local governments are much better placed to levy land taxes, royalties on resource production, user fees and charges for services and activities in each state. It is often considered that accountability and spending follow taxing powers. </p>
<p>But does this really mean we should hand the power to tax - and to compete down the rates and base - to the states, for our biggest national taxes? </p>
<p>Second, what about inequalities between states, in terms of taxing capacity and cost of government? Currently, the GST is distributed to State and Territory governments according to a <a href="https://www.cgc.gov.au/index.php?option=com_content&view=article&id=37&Itemid=153">horizontal fiscal equalisation</a> formula applied by the Commonwealth Grants Commission. The formula works on a national average of revenue and spending for State and Territory governments, based on the last three years. At present, New South Wales, Victoria and Western Australia are contributing to support South Australia, the Northern Territory and Tasmania. </p>
<p>That means that Western Australia gets less as it comes off the mining boom - but in the early boom years, it got a larger amount. Prime Minister Tony Abbott has <a href="http://www.skynews.com.au/news/politics/national/2014/09/02/abbott-hoses-down-coalition-gst-battle.html">stated</a> that if HFE is to be re-examined, the smaller states would need to be protected and this should be negotiated between the larger - or wealthier - states. </p>
<p>The formula in general terms aims to support equality in opportunity through provision of public goods for people across Australia, while not leading to a free ride in which some State or Territory governments do not tax enough, and also spend their funds poorly.</p>
<p>Third, the White Paper terms of reference emphasise removing “duplication” in government. Just because the Commonwealth government is best placed to raise taxes nationally does not mean it should be in charge of all spending. The Commonwealth is good at making payments to individuals: the social security system. Australians think this is important: we <a href="http://www.aph.gov.au/About_Parliament/Senate/Powers_practice_n_procedures/%7E/link.aspx?_id=F74707A5A4934E05A67EE5969B156435&_z=z">put this into the Constitution</a>, in s 51(xxiii) and expanded Commonwealth powers in 1946, in a successful referendum (s 51(xxiiiA)). </p>
<p>But the Commonwealth is much less good at service delivery. There is increasing impatience with the proliferation of responsibilities between State, Territory and the Commonwealth governments across areas as diverse as mental health, education, age care, welfare interventions and environmental policy. We can find better ways to ensure that State governments, and the cities and localities in their domain, which are good at public goods and service delivery, can do that. We also need to learn to distinguish between “Commonwealth” policy and “national” policy. </p>
<p>Should we go down the path of Canada and <a href="http://www.cicic.ca/en/702/ministries-of-education.canada">not have a federal department of education at all</a>? It would help if the Commonwealth government could restrain itself from saying or doing things on, say, <a href="http://blogs.unimelb.edu.au/opinionsonhigh/2014/06/23/evans-williams/">chaplains</a>, or <a href="http://www.theage.com.au/news/national/kids-may-need-the-strap-abbott/2007/06/15/1181414549921.html">corporal punishment</a> in schools - neither of which is a Commonwealth function. </p>
<p>More fundamentally, we need to be careful that the debate about who has power to spend, or about duplication, does not obscure the question about how governments best deliver public goods and programs to individual citizens.</p>
<p>This Forum aims to start the Conversation about renewing our federation. It brings together diverse perspectives from politics, law, economics and social policy to debate the key issues, with a focus on fiscal and democratic accountability issues, and on the hot topic of education. </p>
<p>We hope it will provoke some thoughts on how we can pursue federal reform to support both sustainable financing for government and a good society for all Australians in future. </p>
<p><em>Our Renewing Federalism series will culminate in a symposium on October 2 at ANU. If you would like to attend the event, please see event details and <a href="https://taxpolicy.crawford.anu.edu.au/events/4661/renewing-australian-federalism-starting-conversation">RSVP here</a>.</em></p>
<hr>
<p><strong>Read more in the series <a href="https://theconversation.com/au/topics/renewing-federalism">here.</a></strong></p><img src="https://counter.theconversation.com/content/31373/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Miranda Stewart receives funding from the Australian Research Council and with the Melbourne School of Government, from the Victorian Department of Premier and Cabinet for the project <a href="http://www.government.unimelb.edu.au/renewing-federalism">http://www.government.unimelb.edu.au/renewing-federalism</a> .</span></em></p>The reform of Australia’s federation is under review, with a White Paper process currently underway. In partnership with the Australian National University’s Tax and Transfer Policy Institute at the Crawford…Miranda Stewart, Professor and Director, Australian Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/313682014-09-14T20:20:39Z2014-09-14T20:20:39ZWhy we need clear rules between the states and Commonwealth<figure><img src="https://images.theconversation.com/files/58633/original/zqgbwb6c-1410316655.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Does COAG help the Prime Minister and the Premiers collaborate - or create a platform for empty grandstanding?</span> <span class="attribution"><span class="source">Alan Porritt/AAP</span></span></figcaption></figure><p><em>The reform of Australia’s federation is under review. In this special series, we ask leading Australian academics to begin a debate on renewing federalism, from tax reform to the broader issues of democracy.</em></p>
<p><em>Curtin University’s John Phillimore and Professor Linda Botterill from the University of Canberra argue there needs to be clear rules around the way Commonwealth–State cooperate.</em></p>
<hr>
<p>Debate around federalism is often, understandably, dominated by the fiscal relationship between the Commonwealth and the States. However, the position of the States vis à vis the Commonwealth is weak not only because of the <a href="http://en.wikipedia.org/wiki/Fiscal_imbalance_in_Australia">vertical fiscal imbalance</a>. Another important factor is the lack of strong, stable and predictable structures of policy cooperation and coordination.</p>
<p>The terms of reference for the federalism <a href="http://www.pm.gov.au/media/2014-06-28/white-paper-reform-federation">White Paper</a> specifically “seek to clarify roles and responsibilities to ensure that, as far as possible, the States and Territories are sovereign in their own sphere”. Arguably, for the federation to function effectively, this should be interpreted to include consideration of the institutional arrangements at the heart of the Commonwealth-State relationship, as well as the financial component.</p>
<p>One approach to reform, which former Labor prime minister Kevin Rudd <a href="http://www.theaustralian.com.au/national-affairs/opinion/new-senate-might-reform/story-e6frgd0x-1226716373957">initially emphasised</a>, is to focus on cooperation between governments, or what is often called “cooperative federalism”. This view recognises that policy complexity and overlap makes some degree of cooperation between governments inevitable if the federal system is to function.</p>
<p>The problem with “cooperative federalism” is what we mean by “cooperation”. There is a scene in an episode of Yes, Prime Minister, in which PM Jim Hacker is upset at one of his Cabinet colleagues. He laments to his private secretary, Bernard Woolley:</p>
<blockquote>
<p>Jim Hacker: He’s got to learn to cooperate.</p>
<p>Bernard Woolley: What do you mean cooperate?</p>
<p>Jim Hacker: I mean obey my commands. That’s what cooperate means when you’re Prime Minister.</p>
</blockquote>
<p>There are many premiers and state governments who probably feel that this describes the situation in Australia over many decades. So, how might cooperation become real and not forced?</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/58644/original/7dd9n8qf-1410318418.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/58644/original/7dd9n8qf-1410318418.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=884&fit=crop&dpr=1 600w, https://images.theconversation.com/files/58644/original/7dd9n8qf-1410318418.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=884&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/58644/original/7dd9n8qf-1410318418.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=884&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/58644/original/7dd9n8qf-1410318418.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1111&fit=crop&dpr=1 754w, https://images.theconversation.com/files/58644/original/7dd9n8qf-1410318418.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1111&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/58644/original/7dd9n8qf-1410318418.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1111&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The current arrangments between the State and Federal governments might not be as stable as it seems.</span>
<span class="attribution"><span class="source">Marina del Castell/Flickr</span></span>
</figcaption>
</figure>
<p>One problem is that in spite of the importance of Commonwealth–State cooperation and coordination in many areas of policy, the Australian constitution is largely silent on how the two levels of government should interact, aside from recourse to the High Court where their laws conflict. </p>
<p>This has caused problems as new policy concerns have emerged and as policy areas that were once seen as primarily local matters are increasingly seen as having a national dimension and hence being of political and policy interest to the Commonwealth.</p>
<p>Since the establishment of the first Ministerial Council in 1934, an array of institutional arrangements has developed to address the problem of cooperation and coordination. These include: heads of government meetings such as <a href="http://www.coag.gov.au/">COAG</a> – the Council of Australian Governments which comprises the Prime Minister, Premiers, Chief Ministers and the head of the Australian Local Government Association; ministerial councils; intergovernmental agreements; and specific agencies such as Food Standards Australia New Zealand or the National Transport Commission. </p>
<p>The proliferation of these institutions has not always been welcomed, and COAG acted in 1992, 2004 and most recently 2013 to reduce the number of ministerial councils. This has been largely an ad hoc process which has run the risk of leaving important areas of policy involving both levels of government in limbo, and undermining successful examples of cooperation between governments. </p>
<p>The White Paper provides an opportunity to not only address the fiscal challenges of federalism but also the structure and roles of its institutions. At present, key bodies such as COAG and related ministerial councils are essentially meetings, without underlying legislation or enforceable rules. </p>
<p>Legislation to establish COAG and its operating procedures is one option, but at a minimum this could be addressed in the first instance through the establishment of an Intergovernmental Agreement to underpin the operations of COAG which:</p>
<ul>
<li> Articulates principles to guide the federation, such as subsidiarity and the need for respect, trust and good faith in negotiations;</li>
<li> Specifies COAG’s operations, including meeting frequency, agenda-setting and chairmanship; and</li>
<li> Establishes an independent COAG secretariat.</li>
</ul>
<p>At the moment, COAG meets as often or as seldom as the prime minister wishes. The PM also sets the meeting agenda and controls the COAG secretariat through the Department of the Prime Minister and Cabinet. An IGA would minimise Hacker-esque approaches to cooperative IGR by providing the states with some certainty around their dealings with the Commonwealth. </p>
<p>It would also go some way to preventing developments such as in the recent <a href="http://www.smh.com.au/business/federal-budget/states-face-huge-shortfall-in-funding-20140513-388b8.html">federal budget</a> when the Commonwealth reneged on a number of signed funding agreements, <a href="https://theconversation.com/states-told-to-be-adults-as-abbott-rules-out-meeting-26704">refused to hold a COAG meeting</a> despite a request to do so from seven premiers and chief ministers, and abolished the <a href="http://www.coagreformcouncil.gov.au/">COAG Reform Council</a> without prior reference to the States and Territories.</p>
<p>No-one wants meetings or institutions for their own sake. But without properly working intergovernmental institutions covering the major areas of policy making, operating under effective and fair rules and practices so that governments can be held accountable to each other, then we may get the worst of both worlds – a lack of clarity in terms of roles and responsibilities, and ongoing opportunistic behaviour by both the Commonwealth and the States in dealing with each other on important national issues.</p>
<p><em>Renewing Federalism is in partnership with the Australian National University’s Tax and Transfer Policy Institute at the Crawford School of Public Policy and with the University of Melbourne School of Government.</em></p>
<p><em>Our Renewing Federalism series will culminate in a symposium on October 2 at ANU. If you would like to attend the event, please see event details and <a href="https://taxpolicy.crawford.anu.edu.au/events/4661/renewing-australian-federalism-starting-conversation">RSVP here</a>.</em></p>
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<p><strong>Read more in the series <a href="https://theconversation.com/au/topics/renewing-federalism">here</a></strong></p><img src="https://counter.theconversation.com/content/31368/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The reform of Australia’s federation is under review. In this special series, we ask leading Australian academics to begin a debate on renewing federalism, from tax reform to the broader issues of democracy…John Phillimore, Executive Director, John Curtin Institute of Public Policy, Curtin UniversityLinda Botterill, Professor in Australian Public Policy, University of CanberraLicensed as Creative Commons – attribution, no derivatives.