Over the years , Australian federalism ‘cake’ has become more and more marble like under the banner of collaborative or cooperative federalism leading to more overlapping , ambiguity, duplication, bureaucracy and accountability deficit .
The theoretical merit of decentralised power and therefore decentralised responsiveness had created an accountability deficit.
Accountability in simple terms is to account for ones actions to those affected by them.
According to Management Advisory Board/Management Improvement Advisory Committee (MAB/MIAC) report,
‘In the context of the relationship between public servants, secretaries of departments and ministers, and ministers and the Parliament, accountability is defined as existing where there is a direct authority relationship within which one party accounts to a person or body for the performance of tasks or functions conferred by that person or body “
At this junction, it is imperative to talk about the effect of federalism on government accountability in its policy-making and solving modern day complex problems such as climate change, homelessness, indigenous welfare and so on.
Policy makers & Governments around the world have realised that lot of these that wicked problem need some form of networking such as public private partnerships , ‘ whole government approach’ where range of portfolios, departments, organisations and jurisdictions come together to deliver better quality outcomes , increase citizen participation & improve government’s responsiveness towards these issues .
However this collaborative problem-solving policy implementation creates an accountability gap
Lynelle Briggs in her paper ‘Delivering performance and accountability ‘acknowledges that these new collaboration ways can be unstructured, messy …
“It points to accountability gaps that have emerged as the new modes of policy implementation have failed to achieve the standards of transparency and accountability that the public expects from governments” (Lynelle Briggs, APSC, 2008)
Such a gap don’t exist in countries like New Zealand which follows unitary style of government where one government is ultimately responsible and accountable.
Closely linked term, which often revered as virtue, is ‘competitive federalism’ whereby different governments compete for private and public funds & resources based on their performance, utilisation, returns, and state legislation and rules their device.
There are 9 governments and 15 legislative chambers in Australia for a population based off just fewer than 25 million.
Hypothetically, if we were to construct Australian constitution afresh, will we create 9 governments (Greg Craven, 2005)… to compete vertically and horizontally amongst themselves for resources on the lame excuse that it boosts creativity?
As Dr Peter Long questions the virtue of competitive federalism (during Workshop for Unit 1), if this was the case why is it that we look up to UK and New Zealand for most of our reform ideas.
Also the theoretical advantage of competing leading to best utilisation of resources have, in reality , become ‘ race to the bottom’ in many cases driven by parochialism .( John Brumby , 2014) . US has competitive federalism which has resulted in poor states to generally stay poor and keep their people poor (Michael Pascoe, 2014).
Thus it can be again be concluded that Australia would be better governed without both cooperative and compititive federalism
Fiscal Imbalances created due to running Australian Governance as a Federal
Let’s now look at now the financial aspect of governing as no discussion is complete without a mention of fiscal impact.
The costs of running multiple tiers of governments, & the cost of managing their imbalanced roles and responsibilities interactions, compliance etc. is staggering. It was estimated to be around $40 billion in 2002. The per capita cost as of today would be much higher compared to per capital cost of running unitary style of governments like UK or New Zealand. When experts concludes that costs of running unitary style UK Government is more than that of Australia , they often forget that UK is 3 times in population to Australia .
Commonwealth raises about 82 % of tax revenue in Australia .States are responsible for at least 40% of national expenditure. This means that states are reliant on commonwealth grants to meet their obligations of delivering services such as schools, hospitals, police and public transport. (Anne Twomey 2008)
This imbalance between revenue generation and expenditure is often enough referred as Vertical Fiscal Imbalance. (VFI)
Australia has the biggest VFI in the world where nearly 40% of state and local revenue is contributed by Commonwealth grants
No state at present in Australia has the ability to raise its on revenue/taxes to just charge it on duties or tasks. .
The well-known Vertical fiscal imbalance (resulted due to central monopoly over major taxes,), Commonwealth grants, tied or untied, (SPP), Horizontal fiscal equalisation (HFE) perils, are all the creations of our flawed federal system.
This section further demonstrates that Australia would be better governed if it was not a federation. The later section makes case for alternative form where these perils will cease to exists if not completely, then at least to a greater extend
With centralisation of major taxes and revenue and its distribution to state using SPP, grants HFE principles it seems states are mostly the middleman. They are reduced to mere service delivering agencies for Commonwealth programs (Jonathan Pincus, 2008)
Commission of Audit reports acknowledges that the current Federation operations poses fundamental challenge to delivery of good, responsible government in Australia
Recommendation: Australia as Unitary or two tier government
The flaws in the Federal systems have been well recognised and various governments have tried to fix them by changing the intergovernmental arrangements or relations. The white paper on Reforms of the Federation 2015 under Tony Abbott’s government highlighted lot of the above listed issues. It recognised the imbalance and ambiguity in roles, responsibilities and revenue. It then suggested that Centre does too much, it talked about defined roles, responsibilities and some reforms around revenue and making state more sovereign on principle of subsidiarity
However it failed to answer if federalism is still fit for the purpose?
Australia is a relatively new nation compared to the rest of the world, with one of the least population mass compared to the landmass.
It is recommended the current three tie of government be reduced to two by abolishing states. Australia does not need States.
States in Australia, unlike in other countries are not formed on the basis of culture, race, religion or language but evolved from colonies for merely geographical and economic activity.
Bob Hawke repeated advocated for centralism and abolishing of state government.
This will mean that we will have one parliament with all law making powers .This will save billions of hard earned tax earners money which can be better utilised every year in modernising government with latest technology
The idea of abolishing three tiers of government was also discussed in 2020 summit however they suggested to abolish local government and replace with creation of more ( as many as 40 ) states ( future of Australia Governance in Australia 2020, Canberra 2008).
Centralism or unitary style which is criticised as lacking flexibility or subsidiarity is not always true. Unitary Governments can also have local government in the form of regional , city or district councils which are more closed to the ground to look after the needs and interests of specific groups or communities thereby providing subsidiarity.
Our twin neighbours New Zealand (who we mimic while devising lot of policies) shows that unitary style works better than federation for economies like ours. New Zealand is better and effectively governed than Australia. Look at the last decade – while we changed five prime ministers and not much changed apart from declining economy , dwindling public services , New Zealand in the same period managed to increase GST to 15% , reduced top income tax by 6% to 33%, .
It also managed to commercialise number of public enterprises.
Imagine an Australia where there is no more bucks passing, no duplication or overlapping or roles and responsibilities… No more complexity of compliance with different legislations.
That Australia will have only one department each for health, agriculture education and so on supported by regional councils devising uniform yet flexible policies and services. Therefore the best of staff from all abolished state departments will come together to form intellectual central nucleus departments whilst administrative wings / divisions may exist in the regions to deliver the policies and customise those to regional requirements.
There will be no more vertical fiscal imbalance; there will be no differential state laws and business in the country will experience a ‘seamless national market’ with the uniform laws and regulations
Lawmaking authority could be devolved to large number of regional councils ,just like state government currently delegates to local government, except this will eliminate the middle man ( state government ) leading to more efficiency, responsiveness, transparency, customisation and subsidiarity.
In conclusion, as former Prime Minister Bob Hawke once said, the time has come to rewrite the constitution and do away with federalism in its current form.
Keep it simple – is the new mantra going around the world and same applies to our government too. Any tinkering reforms to current federation such as realignment of roles , responsibilities and revenue , whist still keeping three tiers due to fear of changing too much or pragmatism , will only act as a bandage to the bleeding economy and political system. As long as the States exists, the powerful cashed up Commonwealth will always be tempted to obstruct the state affairs for electoral advantage or in the national interest as it sees “(Jonathan Pincus, 2008)
Australians are ready for change as indicated by various surveys and polls.
A survey conducted by Griffith University in 2014 reported 71% of respondents want the current system to change. Further survey instigated that year by a lobby group called Beyond Federation also found that 78% of respondents were in favour of single set of laws for the nation.
Lot of harm has already been done .The time has come to stop it. Australia will surely be better governed if it is federation no more but instead adopt compact, simpler, straightforward forms such as unitary form.