tag:theconversation.com,2011:/us/topics/nick-greiner-13126/articlesNick Greiner – The Conversation2021-10-06T06:43:23Ztag:theconversation.com,2011:article/1693602021-10-06T06:43:23Z2021-10-06T06:43:23ZA federal ICAC must end the confusion between integrity questions and corruption<figure><img src="https://images.theconversation.com/files/424939/original/file-20211006-13-1svd3hv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Bianca de Marchi/AAP</span></span></figcaption></figure><p><em>Gary Sturgess was director-general of NSW Premier Nick Greiner’s cabinet office in 1988 and the “architect” of ICAC.</em></p>
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<p>There has been a great deal of commentary about the NSW Independent Commission Against Corruption (ICAC) in recent days, in light of Gladys Berejiklian’s resignation as premier of New South Wales. Much of this has been ill-informed, and some correction is required as the debate over a federal ICAC rolls on.</p>
<p>The NSW ICAC, the first anti-corruption agency in Australia, established in 1988, is an extraordinarily powerful organisation. This should never be taken for granted. It usually conducts its hearings in public. This results in considerable capacity to do harm to the reputations of innocent people, by a counsel assisting who ignores legal conventions or by headline-seeking journalists.</p>
<p>Those powers are not without precedent in this country. The NSW ICAC is simply a standing royal commission, albeit one that, for reasons of independence, sets its own terms of reference.</p>
<p>Other than in the fields of corruption prevention and education, it did not borrow from the Hong Kong agency that bears the same name. The HK ICAC operates with a great deal of secrecy, as has been pointed out, but it exercises extraordinary powers in secret, including detention without warrant. The NSW government did not want to follow this precedent.</p>
<p>And contrary to what one member of the Greiner cabinet has <a href="https://www.smh.com.au/politics/nsw/poor-gladys-berejiklian-passed-the-pub-test-but-the-icac-is-another-matter-20211003-p58wu4.html">recently claimed</a>, it was not cobbled together from precedents around the world. It was directly modelled on the royal commission, an institution that Australians know well, where there was an existing body of law and practice on which commissioners and courts could draw.</p>
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Read more:
<a href="https://theconversation.com/icac-is-not-a-curse-and-probity-in-government-matters-the-australian-media-would-do-well-to-remember-that-169132">ICAC is not a curse, and probity in government matters. The Australian media would do well to remember that</a>
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<p>For the most part, royal commissions conduct their hearings in public and they publish reports that damage the reputations of named individuals. That is an onerous responsibility and mistakes are sometimes made. One could well understand the Australian public taking the view that the risks are too great and royal commissions should not be used in that way.</p>
<p>But we must be consistent. There were few complaints when Frank Costigan <a href="https://catalogue.nla.gov.au/Record/2870892">identified</a> certain painters and dockers and their associates as criminals, or the more recent <a href="https://financialservices.royalcommission.gov.au/Pages/default.html">Hayne royal commission</a> into banking and superannuation named and shamed company executives, shattering their careers. </p>
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<img alt="" src="https://images.theconversation.com/files/424940/original/file-20211006-20-1jq32u2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/424940/original/file-20211006-20-1jq32u2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/424940/original/file-20211006-20-1jq32u2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/424940/original/file-20211006-20-1jq32u2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/424940/original/file-20211006-20-1jq32u2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/424940/original/file-20211006-20-1jq32u2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/424940/original/file-20211006-20-1jq32u2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&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">Former NSW Premier Nick Greiner established ICAC in 1988. Later, he was one of its targets.</span>
<span class="attribution"><span class="source">Gill Allen/AAP</span></span>
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<p>Given this history, why would politicians and public servants be singled out for different treatment? If there were to be a change to the NSW legislation, there would need to be commensurate change to the legislation governing royal commissions.</p>
<p>Some commentators seem to think the NSW ICAC makes findings of criminal guilt or innocence. Others <a href="https://www.theaustralian.com.au/commentary/gladys-berejiklian-should-have-stepped-downa-year-ago/news-story/44531081a2c3b5eab9c487fb1e97cd58">have claimed</a> the legislation creates an offence of corrupt conduct, with the NSW premier having “breached the ICAC Act”. Neither statement is correct. Nor is the ministerial code of conduct “a regulation that sits under the ICAC Act”. </p>
<p>ICAC is simply a commission of inquiry that investigates and reports. If it encounters potential breaches of the criminal law, it has an obligation to hand those matters over to the director of public prosecutions. But it is primarily charged with delivering a report, as other royal commissions do.</p>
<p>Sections 8 and 9 of the <a href="https://www.icac.nsw.gov.au/about-the-nsw-icac/legislation/the-icac-act">NSW act</a>, which provide the meaning of “corrupt conduct”, were designed to define the scope of its powers. It would be unacceptable for the executive government to provide ICAC with terms of reference on a specific allegation. There used to be an old saying in NSW politics – you don’t establish a royal commission if you don’t already know the answer – reflecting the ability of governments to limit political damage by drafting narrow terms of reference.</p>
<p>Section 8 is very wide – it covers a long list of corruption offences, both statutory and common law. But section 9, as originally framed, limited the scope of ICAC’s powers to matters that were already a criminal offence, a disciplinary offence or reasonable grounds for dismissal. The reason for these limitations was to avoid ICAC becoming a morals tribunal, making up standards of its own, or imposing standards retrospectively after a process of scandalisation had resulted in the emergence of new values.</p>
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Read more:
<a href="https://theconversation.com/as-a-nsw-premier-falls-and-sa-guts-its-anti-corruption-commission-what-are-the-lessons-for-integrity-bodies-in-australia-168932">As a NSW premier falls and SA guts its anti-corruption commission, what are the lessons for integrity bodies in Australia?</a>
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<p>That changed with the <a href="https://www.icac.nsw.gov.au/about-the-nsw-icac/legislation/history-and-development-of-the-icac-act">addition of</a> section 9d in 1994, following the <a href="https://www.smh.com.au/national/nsw/nsw-corruption-watchdog-has-brought-down-premiers-ministers-and-corrupt-police-20201014-p56521.html">Supreme Court’s decision</a> in the Greiner case. Parliament extended the scope of corrupt conduct, and so ICAC’s powers, to a substantial breach of a ministerial code of conduct. </p>
<p>Ministerial codes are not primarily about restating the criminal law. They are standards designed to ensure collective responsibility prevails for as long as possible, and that ministerial colleagues believe they can trust one another.</p>
<p>This amendment, initiated by the Liberal-National government of the day, substantially changed the role and function of ICAC. It shifted the focus away from criminal breaches of public trust to incorporate much less serious lapses. The result is that a body charged with exposing corruption, bearing a title that announces that it is charged with exposing corruption, is also responsible for investigating lapses in integrity that fall well short of criminality.</p>
<p>This is directly relevant to the current debate over a federal integrity commission. <a href="https://www.helenhaines.org/bills/integrity">Senator Helen Haines’s bill</a> borrows the wording of the relevant section from the NSW Act, although it extends the definition to include “a civil liability”. It’s a strange addition that would give this body powers to investigate matters that have nothing at all to do with integrity. This is guaranteed to result in confusion in the minds of the general public, and some journalists and commentators, who will confuse civil litigation, an unintended conflict of interest or a mere breach of convention with criminality.</p>
<p>There is a need for an ongoing anti-corruption body in NSW, to deal with those public officials like <a href="https://www.smh.com.au/national/eddie-obeid-ian-macdonald-and-moses-obeid-found-guilty-over-rigged-tender-20210718-p58atd.html">Eddie Obeid</a> who flout the law. There is also a need for an integrity commissioner or a committee on standards in public life, utterly distinct from ICAC, to deal with less serious integrity issues, where conventions can be agreed on in a bipartisan way, and grown-up conversations can be had about the ethics that should apply in public life.</p>
<p>Confuse the two and treat all politicians as crooks, and there is the danger that we will end up with less integrity in public office, not more.</p><img src="https://counter.theconversation.com/content/169360/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gary Sturgess is employed by ANZSOG which is funded by the national and state governments of Australia and New Zealand. He has conducted numerous government inquiries and served on government committees over the years.
He holds the NSW Premier's Chair in Public Service Delivery at ANZSOG, which is funded by the NSW government, but is otherwise independent of government. </span></em></p>The New South Wales ICAC’s remit has changed over the years to investigate more minor breaches by public officials. This can caused confusion and will undermine its effectiveness.Gary Sturgess, Professor of Public Service Delivery, Australia and New Zealand School of Government (ANZSOG)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/799562017-06-22T15:12:00Z2017-06-22T15:12:00ZGrattan on Friday: Plenty of ‘rising damp’ in Turnbull government’s approach<figure><img src="https://images.theconversation.com/files/175226/original/file-20170622-11976-1pypuy3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">On energy security, there is a distinctly 'big government' approach by Malcolm Turnbull.</span> <span class="attribution"><span class="source">Lukas Coch/AAP</span></span></figcaption></figure><p>The Liberals have a new duumvirate at the top of their organisation. Nick Greiner, one-time New South Wales premier, will be installed – in absentia, because he’s in Europe – as president at the party’s federal council on Friday night. Greiner is Malcolm Turnbull’s personal choice.</p>
<p>Andrew Hirst will be given the tick by the party’s executive as federal director. Hirst, who is working with Crosby Textor (the firm that does the party’s polling), is a man of excellent survival skills, having served opposition leaders Brendan Nelson, Turnbull and Tony Abbott, and then Abbott in government.</p>
<p>The two face character-forming challenges.</p>
<p>Greiner, whose credentials include his strong business connections, has to rake in money for a party seriously strapped. Once, the conservatives were usually flush with cash, while Labor cried poor. These days many companies don’t make political donations. Apart from that, a government on the nose doesn’t attract dollars.</p>
<p>Hirst must revitalise a campaign structure that’s much weaker than Labor’s, in an era when the dark arts of political persuasion approach the complexity of neurosurgery, voters are cynical or not listening, and many in the “base” are unimpressed with Turnbullism.</p>
<p>How much easier it would be to ask for money and activate the grassroots if, instead of the Coalition trailing in 14 consecutive Newspolls (the latest this week), it had had a string of commanding leads.</p>
<p>Polls drive today’s politics to an alarming degree, affecting the mood of a party, inside and outside parliament. If the Coalition were doing well, the critics in Turnbull’s ranks would have to be much more accepting of him. Popularity is a warm protective blanket for a leader.</p>
<p>Liberals point to Turnbull’s ascendancy over Bill Shorten as preferred prime minister, but that’s of limited comfort, because they know many voters are disillusioned with the leader they’d hoped would represent a new brand of politics.</p>
<p>As it attempts to limit vulnerabilities and confront pressing issues, the government is sending some confusing signals to the electorate.</p>
<p>There is the whole “Labor-lite” message.</p>
<p>Getting the needs-based Gonski 2.0 through parliament is a substantial achievement. It’s good policy and should limit, albeit not wipe out, Labor’s advantage on schools.</p>
<p>But the policy spends a lot, in tight times, after years of the Liberal schools story saying it wasn’t about more money. The government’s desperation to pass the bill was evidenced by its adding in this week’s negotiations $A4.9 billion to its initial extra $18.6 billion ten-year plan.</p>
<p>The exercise has also seen the Liberals shun their usual cultivation of the Catholic lobby, which has reacted aggressively.</p>
<p>In business and economic areas, the Turnbull government is also saying loud and clear that it is not in the usual Liberal mould.</p>
<p>Remember the old talk of “wets” and “dries” in the Liberal party? The “dries” – economic rationalists – gained dominance many years ago. Both sides of politics dried out, and selling government-owned enterprises became the order of the day.</p>
<p>Now we’re seeing plenty of rising damp, not so surprising with Labor but more so from the Liberals.</p>
<p>The budget’s bank tax was driven by fiscal necessity. But the new rigorous governance regime for the banks – responding to some appalling behaviour – is notably intrusive and a change of tack. The Abbott government tried to unwind protections in the financial advice area.</p>
<p>On energy security, there is a distinctly “big government” approach.</p>
<p>Galvanised by a worsening power crisis and people’s deep concern about rising prices, the government is to use export controls to boost the availability of gas.</p>
<p>In the budget, it announced it wanted to buy out the New South Wales and Victorian shares in the Snowy Hydro, boosting the Commonwealth’s ownership from 13% to 100%.</p>
<p>It is also leaving open the prospect of helping to finance new clean coal generators.</p>
<p>Business is desperately looking for a coherent energy policy to provide certainty for investment. The Business Council of Australia has welcomed the Finkel report’s advocacy of a clean energy target, hoping this could be a path to a settled policy.</p>
<p>But the BCA this week warned: “Companies will only invest in new energy infrastructure if there is a stable policy framework, with minimal government intervention, that will outlast the government of the day … We strongly caution against using taxpayer funds to finance new electricity generation”.</p>
<p>The possibility of financing power plants goes to the Coalition’s commitment to coal. But it’s the outlook for coal that speaks strongly against such financing.</p>
<p>If so-called clean coal can’t attract adequate private investment, it will be because the long-term viability of such projects is considered poor. So it would be rash for a government to jump in with public funds or guarantees that could be rued as the years pass.</p>
<p>Despite the signals, that initiative is unlikely to come to pass. One Liberal says that if the government ever tried to invest in coal-fired power stations Turnbull would have “a riot on his hands”.</p>
<p>On Thursday the government received a fresh blast from the big end of town, after the South Australian budget followed the federal lead of garnering revenue from unpopular institutions by imposing its own bank tax.</p>
<p>The BCA blamed the Turnbull government for “letting the genie out of the bottle”, and declared that: “All of these ‘one-off’ government decisions, when taken together, have a chilling effect on business investment which is at its lowest level as a share of GDP since June 1994”. </p>
<p>The BCA claimed that: “Australia is becoming a laughing stock of global investment circles as erratic governments – state, territory and federal – carelessly undermine and chop and change the rules of doing business”.</p>
<p>Of course a discount must be applied to the BCA comments – there is a lot of self-interest involved. It represents the country’s biggest companies, including in the banking and resources sectors.</p>
<p>Nevertheless it is business, particularly big business, that drives job creation and the angst does little for the positive mood the government is trying to encourage.</p>
<p>Greiner is likely to get some tough feedback as he moves round his business network, wearing his new Liberal president tag.</p>
<iframe src="https://www.podbean.com/media/player/ivb89-6c3c98?from=yiiadmin&skin=1&btn-skin=107&share=1&fonts=Helvetica&auto=0&download=0&rtl=0" height="100" width="100%" frameborder="0" scrolling="no" data-name="pb-iframe-player"></iframe><img src="https://counter.theconversation.com/content/79956/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan owns bank shares.</span></em></p>As it attempts to limit vulnerabilities and confront pressing issues, the government is sending some confusing signals to the electorate.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/401712015-04-15T07:13:31Z2015-04-15T07:13:31ZHigh Court forces ICAC to drop Cunneen inquiry and review others<p>Today, a majority of the <a href="http://www.hcourt.gov.au/assets/publications/judgment-summaries/2015/hca-14-2015-04-15.pdf">High Court held</a> that NSW’s Independent Commission Against Corruption (ICAC) did not have the power to investigate conduct allegedly engaged in by Margaret Cunneen SC, NSW’s deputy senior Crown prosecutor, and her son. </p>
<p>The decision is likely to have a bearing on <a href="http://www.smh.com.au/nsw/high-court-rejects-icacs-bid-to-investigate-crown-prosecutor-margaret-cunneen-20150415-1mjpgb.html">other ICAC investigations</a> into the conduct of private individuals.</p>
<p>In May 2014, Cunneen was alleged to have told her son’s girlfriend to fake chest pains in order to prevent a police officer from taking a blood alcohol reading after a car accident.</p>
<h2>What did the High Court decide?</h2>
<p>The High Court had to consider a narrow legal issue: whether the alleged conduct fell within the definition of “corrupt conduct” in the <a href="http://www.legislation.nsw.gov.au/maintop/view/inforce/act+35+1988+cd+0+N">Independent Commission Against Corruption Act 1988 (NSW)</a>. The issue arose because the alleged conduct involved Cunneen in her personal capacity (rather than in her capacity as a Crown prosecutor). While it might have affected or hindered the efficient investigations of the police officers, it involved no improper conduct on their part.</p>
<p>The ICAC Act allows ICAC to investigate private individuals, but only where their conduct “adversely affects” or “could adversely affect” the exercise of official functions by public officials where it could involve a list of matters. These include bribery, blackmail, fraud and, relevantly for Cunneen, perverting the course of justice.</p>
<p>The <a href="http://www.austlii.edu.au/au/cases/cth/HCA/2015/14.html">High Court</a> held, by a 4:1 majority, that Cunneen’s alleged conduct fell outside the definition of “corrupt conduct”. They held that corrupt conduct requires impropriety on the part of the public official of the kind listed in the Act. This includes acting dishonestly or impartially, acting in breach of public trust or misusing public information or material.</p>
<p>For those interested in the legal arguments, I have <a href="http://theconversation.com/icac-asks-high-court-to-decide-extent-of-its-investigatory-powers-38102">previously explained</a> these in more detail.</p>
<h2>Does the decision affect other ICAC investigations?</h2>
<p>ICAC had argued that if the High Court adopted a narrow definition of “corrupt conduct”, this would affect a number of its concluded and ongoing investigations. While the decision will undoubtedly affect some of ICAC’s investigations into the conduct of private individuals, it is difficult to predict its precise impact. The facts of each investigation will have to be assessed in light of the court’s explanation of the term “corrupt conduct”.</p>
<p>It would certainly be expected that ICAC will review current investigations. And individuals subject to previous or ongoing ICAC investigations will be keenly reviewing the decision to see whether ICAC has exceeded its powers in those investigations.</p>
<p>Depending on how ICAC responds, today’s decision might also provide the impetus for a more systemic review of ICAC’s investigations by one of its oversight bodies. The <a href="http://www.oiicac.nsw.gov.au/">Inspector</a> of ICAC, currently former Supreme Court Justice David Levine AO RFD QC, is tasked with auditing ICAC’s operations to ensure compliance with NSW law. A <a href="http://www.parliament.nsw.gov.au/icac">parliamentary joint committee</a> is charged with monitoring and reviewing the exercise by ICAC of its functions and reporting to Parliament.</p>
<h2>ICAC’s future: should the government respond?</h2>
<p>Given the political damage that both major parties have sustained before ICAC in recent years, there may not be much appetite for extending its powers in light of today’s decision. However, the decision provides an important opportunity to reconsider the appropriate scope of the commission’s powers.</p>
<p>When then premier Nick Greiner <a href="http://www.icac.nsw.gov.au/about-the-icac/legislation/second-reading-speech">introduced</a> ICAC in 1988, he said it was part of restoring:</p>
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<p>… the integrity of public administration and public institutions in this state. Nothing is more destructive of democracy than a situation where the people lack confidence in those administrators and institutions that stand in a position of public trust.</p>
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<p>However, he stressed that it was not intended that ICAC would “investigate crime generally”.</p>
<p>It could be argued that today’s High Court’s decision is consistent with the principles on which ICAC was founded. The court’s interpretation of ICAC’s powers limits the commission’s jurisdiction to ensure its focus is on certain types of deliberately improper conduct on the part of public officials.</p>
<p>Private individuals can only be investigated where their conduct has the capacity to affect the probity of a public official’s conduct. Other illegal conduct by private individuals is left to be investigated by other agencies, such as the NSW police force.</p>
<p>However, a number of recent, and very serious, ICAC investigations have revealed that attempts by private individuals to interfere with government decision-making perhaps ought to fall within ICAC’s jurisdiction. While these matters may not involve improper conduct by government officials, they may still have the capacity to undermine the integrity of government processes. In this way, they affect public trust in government institutions.</p>
<p>Such actions often not only affect the integrity of government processes, but also how taxpayers’ money is spent or public assets are used. This can lead to inequality of opportunity for businesses and individuals.</p>
<p>The High Court expressed some concern that a wider view of corrupt conduct would bring too many offences within ICAC’s jurisdiction. At a practical level, this might mean ICAC would be unable to discharge its functions. This concern, however, could be addressed by reviewing the seriousness of the conduct that ICAC chooses to investigate.</p>
<h2>Other lessons from the Cunneen decision</h2>
<p>Today’s High Court decision did not consider whether, given the relatively low level of seriousness of the alleged conduct, ICAC should have investigated Cunneen. ICAC’s decision to conduct a public investigation also warrants further attention.</p>
<p>Under its statute, ICAC must “direct its attention to <em>serious</em> corrupt conduct and <em>systemic</em> corrupt conduct”. The commission is also directed to take into consideration whether the subject matter of the investigation is trivial in determining whether to proceed. </p>
<p>To conduct a public inquiry, ICAC must be “satisfied that it is the public interest to do so”, taking into account, among other matters, “the <em>seriousness</em> of the allegation or complaint being investigated”.</p>
<p>While not raised directly by today’s decision, the Cuneen investigation highlights that ICAC’s compliance with these statutory requirements may also be in need of review.</p><img src="https://counter.theconversation.com/content/40171/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gabrielle Appleby receives funding from the Australian Research Council. She previously received funding from the Local Government Association (South Australia) through their research and development scheme, to undertake a survey of public sector and community attitudes to corruption, misconduct and maladministration in local government.</span></em></p>The High Court has decided ICAC did not have the power to investigate a NSW Crown prosecutor, so the commission will have to review investigations involving the conduct of private individuals.Gabrielle Appleby, Associate Professor, UNSW Law School, UNSW SydneyLicensed 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>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/pPuSheTv3TI?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Terry Moran discusses the proposals raised in this article at the CEDA launch.</span></figcaption>
</figure>
<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.