Securing Australia’s future: governance and state-federal relations

What is a meaningful role for the Commonwealth government in the early 21st century? AAP Image/Paul Miller

SECURING AUSTRALIA’S FUTURE: As the Commission of Audit reviews government activity and spending, The Conversation’s experts take a closer look at key policy areas tied to this funding – what’s working, what’s not and where current funds are best spent.


The Commission of Audit’s brief to assess the split of roles and responsibilities between the Commonwealth and the states and territories is the first indication of the Abbott government’s commitment to undertake radical reform in this area.

The commissioners have been given the job of identifying areas of unnecessary duplication between the activities of the Commonwealth and other levels of government. And to identify areas or programs where Commonwealth involvement is inappropriate, no longer needed, or blurs the line of accountability.

The terms of reference cover a complexity of institutional arrangements, joint funding agreements and national partnerships. But dismantling this intricate tapestry of intergovernmental financing and policy delivery will require more than the few months allocated to the commission for this phase of its work.

The most valuable and achievable role for the Commission of Audit is to explore the question: what is a meaningful role for the Commonwealth government in the early 21st century? Australia’s Constitution sets out what was considered a meaningful role for the new national government in 1901 but now bears little relation to the complex intermingling of roles and responsibilities.

Since federation, the Commonwealth’s role that has become unstable, while the states and territories have consistently retained their focus on service delivery.

The division between Commonwealth and state powers requires clarification and certainty. Shutterstock

When the government changes federally, so do priorities for investment and attention from the Commonwealth. Federal political leaders frequently campaign on issues under the jurisdictional control of the states and territories and federal public servants have to scramble to get across new policy detail and programs.

The troubled implementation of the “pink batts” scheme should rightly draw the line under unrealistic expectations of Commonwealth service delivery capacity for some time.

At the moment, we are stuck in a no-man’s land of an out-dated Constitution; an increased demand for state delivered services, for which they lack the revenue base to meet; and intermittent Commonwealth interest and investment in a large number of issues under the banner of “national interest”.

What’s working

Despite the general doom and gloom about Commonwealth-state relations, there are a few areas which bear closer study by the Commission of Audit.

The commission should immediately re-endorse the objectives and principles of the first Intergovernmental Agreement on Federal Financial Relations in 2008. The agreement champions collaborative working arrangements, recognition of the state primacy for service delivery responsibility and a focus on outcomes.

But, as the Council of Australian Governments COAG Reform Council pointed out in its recent report on Lessons for Federal Reform, the commitment to the principles did not flow through to practice, in particular by Commonwealth ministers and their agencies. Cultural change is needed to embed collaborative practice and move from punitive and coercive methods.

Other sectors can learn from collaborations on disaster management. AAP

An area of joint responsibility worth closer study is emergency disaster management. Australia’s disaster management framework involves the three tiers of government and the response scales up from local to state to Commonwealth, depending on the size of the event.

The disaster management framework reflects the federalism principle of subsidiarity, which states that decision-making should sit as close to citizens as possible. It also acknowledges that effective outcomes are more likely when intergovernmental arrangements establish clear and shared understanding of the roles and responsibilities of the different tiers of government.

With the World Bank describing the response effort to the 2011 Queensland floods as “global best practice”, the model offers lessons for other areas of co-operation.

Waste and inefficiency

The Commission of Audit will turn its attention to the big spending areas of health and education. Health is the most complicated and is managed through a complex National Partnership agreement which splits funding and service delivery responsibilities. The states do not have the financial capacity to fund current and future demand for health services.

In education, the Commonwealth has a role in funding independent schools, but has progressively expanded into school education more generally.

Yet, in contrast, there is no federal education department in Canada – and Canada has one of the highest performing school systems in the OECD countries. Devolution of education to the state or local level is a feature of the majority of federations.

The Commonwealth has progressively expanded into school education. AAP/Paul Miller

The challenge for the Commission of Audit is to identify what is genuinely an issue of national importance, what requires collaboration and coordination, and what should be left to state or local jurisdictions.

Reducing inefficiency and layers of bureaucracy requires a trade-off between principles – between uniformity and national standards, local policy innovation, competition and recognition of regional difference. This is the ongoing federal tension, and where the contemporary balance falls will guide the deliberations of the Commission of Audit.

Another way to reduce duplication and inefficiency is to re-conceptualise the role of the Commonwealth within the federation.

American scholar Shelly Metzenbaum identifies the role of the centre as that of “system steward”. This role puts the focus on the central government shifting from monitoring and compliance to identifying productive and innovative approaches to problems and disseminating good practice across jurisdictions.

Allied with this positive role, the Commonwealth could provide a safety net, stepping in to avert serious failure, while freeing high-performing states to continue improvements. Such a transition would liberate the Commonwealth from having to maintain duplicate expertise in areas of state service delivery.

Areas of priority

The issue of the allocation of roles and responsibilities will be ongoing, even after the Commission of Audit reports. New issues such as gene technology, counter-terrorism or biosecurity will continue to emerge and the federal system would benefit from an ongoing body to make the allocation.

In an address to a recent federalism forum, Queensland premier Campbell Newman suggested a refocused COAG could take on this role. He said COAG could be a “federation arbitrator to draw the line on who does what”.

The establishment of an ongoing body to advise on the allocation of roles and responsibilities between the states and federal government would “unfreeze” the constitution and allow for the systematic management of the allocation as new issues emerged.

The value of the audit and the government’s forthcoming White Paper on Reform of the Federation is that this work can be done methodically and consciously, and allow a resetting of the federal bargain by moving beyond the short-term patches currently binding together our structural and constitutional arrangements.


This is part two of The Conversation’s Securing Australia’s future series. Stay tuned for more instalments over the next three weeks.

Part one: Energy and climate change

Part three: Science and research

Part four: Health care

Part five: Education

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