Last week, the Abbott Government released the Terms of Reference for a White Paper on Reform of the Australian Federation. The White Paper follows consideration of Australia’s federal relations by the National Commission of Audit earlier this year. A team of scholars from the University of Adelaide’s Public Law and Policy Research Unit – Dr Gabrielle Appleby, Associate Professor Alexander Reilly, Dr Matthew Stubbs, Mr Adam Webster and Dr John Williams – made a submission to the Commission (click here). The submission argued that there was a need to redraw the division of responsibilities between the Commonwealth and States, to rethink the States’ tax base and equalisation within the federation, and to rethink the operation of the existing cooperative mechanisms, particularly the Council of Australian Governments (COAG).
The Terms of Reference for the Abbott Government’s White Paper on Reform of the Australian Federation emphasise the waste and inefficiency caused by duplication and overlap in the spheres of responsibility of the State/Territory and federal governments, as well as local governments. We see this particularly in areas such as health, education and local government.
The White Paper will seek to clarify the roles and responsibilities of each level of government, to give each level of government ‘sovereignty’ within the sphere of their responsibility. This increases autonomy in decision-making across the federation – enhancing the prospect of innovation and diversity in local policies and competition between the States. It also makes it easier for voters to discern the services and programs delivered by each level of government and thereby increase accountability. This will require the federal government to limit its policy making to areas described in the White Paper as ‘areas of core national interests’. The Terms of Reference indicates the government wants to harness the federal structure to increase productivity. The Terms of Reference also flag improvements to be made to COAG.
The areas that the Terms of Reference have identified for review are extensive: health, education, housing and homelessness are areas in which Issues Papers will be produced. Other areas include transport infrastructure, Indigenous affairs, justice, disability, welfare services, settlement services, family and parental support, disaster recovery, environmental regulation, adult and community education and youth transitions.
In terms of procedure, a Steering Committee will be established, to be comprised of the Secretaries and Chief Executives of the Commonwealth Department of Prime Minister and Cabinet, State/Territory First Ministers’ departments and the Australian Local Government Association. The Committee will consult with business, non government experts and the community. The White paper is due at the end of 2015.
The White Paper process will be undertaken in conjunction with a White Paper on Tax Reform. It is extremely important these two go hand in hand. The ability of the States to raise their own revenue, and not be beholden to the federal government for finance, will influence how autonomous they can be in policy making. At present, just under 50 per cent of state governments’ revenue comes from the federal government.
In both the National Commission of Audit and the proposed White Paper, the Abbott government’s direction on federalism is very different to what we saw under the Howard or Rudd/Gillard governments. The Howard government continued a trend of consolidating the centralisation of power and policy in the Commonwealth. While Rudd had initially indicated his government would work cooperatively with the States in determining and delivering policies, this quickly fell away when the government was faced with the fallout from the global financial crisis and then falls in the polls. Whether Abbott maintains his commitment to this new direction in federalism when times get tough remains to be seen.