Tony Abbott takes a constitutional

The hopeful – and probably the hopeless – part of the federal government's review of the workings of the federation is that it has not been instigated by lawyers, but by political economists. Each view the tasks of government through the rear ends of different types of telescope, and see the problems, and the opportunities, quite differently. But neither have a great record in promoting much in the way of change or reform to the structures of government, and, given that it's a limited sum-game about power, it is difficult to see much progress being achieved or intended, certainly before the next election.

The economists are, after all, as inclined as lawyers to think that the resolution of questions about the distribution of money and power in a model economy are to be resolved by reason and argument, with the single right answer obvious to anyone of good will, once the question has been considered. They also, of course, tend to think that no one has thought of the problem, and the supposed solution, before.

The truth is that questions of the distribution of legal and constitutional power and money are the fundamental ones, around which modern politics divides, and has always divided. Tony Abbott has, at best, only half the solution, and has only the most limited capacity to impose his bit, least of all at the expense of the other. That's one of the things the constitution is all about.

Circumstances vary over time, as do economic and constitutional problems, and willy nilly, economies, institutions and people adapt and develop. Only rarely, however, is change preceded either by an expression of popular will, an exercise of power by a player in the political system, or by mere recourse to legal, constitutional, political or economic principle.

On Saturday, Abbott announced the preparation of a white paper on reform of Australia's federal structure, to be prepared by a taskforce in Prime Minister and Cabinet and run in parallel with the preparation of a white paper on reform of the Australian tax system. The taskforce, it is said, will consult with business, non-government experts and the community, as well as with state, territory and local government, through the Council of Australian Governments, and is explicitly asked to draw on the National Commission for Audit report and other white paper and reform processes that are under way.

That they have been given an intrinsically political – even ideological – task is made manifest in the marching orders, which are explicitly about reducing and confining the Commonwealth within particular areas, increasing the powers and duties of the states, and, in theory at least, giving them more power and responsibility over the raising of their own taxes. The purpose is to ''reduce and end, as far as possible, the waste, duplication and second guessing between different levels of government, and achieving a more efficient and effective federation... [and] make interacting with government simpler for citizens''.


The taskforce is asked to consider limiting Commonwealth functions and spending into ''core national interest matters'' such as by the powers confered on the Commonwealth by section 51 of the constitution. It wants to reduce overlapping responsibilities between the Commonwealth, states and municipalities, and have clear agreements between different levels of government about their distinct and mutually exclusive responsibilities.

It is to operate according to principles of:

  • subsidiarity, whereby responsibility lies at the lowest level of government possible, allowing flexible approaches to improving outcomes
  • equity, efficiency and effectiveness of service delivery, including a specific focus on service delivery in the regions
  • ''national interest'' considerations, so that where it is appropriate, a national approach is adopted in preference to diversity across jurisdictions
  • accountability for performance in delivering outcomes but (of course) without imposing unnecessary reporting burdens and overly prescriptive controls
  • durability, that is, the allocation of roles and responsibilities should be appropriate for the long term, and
  • fiscal sustainability at both state and Commonwealth levels.

Perhaps one might imagine that the premiers and chief ministers would be over the moon. One does not find much in the way of explicit Commonwealth power to deal with education (including private school education and universities) or health, or many areas of social welfare and community services such as childcare and aged care. So, we imagine, the taskforce is being, at the least, invited to consider handing back complete responsibility for such matters to the states. With the budgets too. And likewise, no doubt, with a host of environmental powers and controls, the organisation and management of infrastructure, transport ands intrastate economic matters and consumer regulation. Implicit too in what the taskforce is being invited to contemplate is the prospects of the states being able to levy their own taxes, including income taxes, and, at the least, having their share of the revenue pie allocated not by political settlements as between the Commonwealth and the states and territories but by some fixed formula.

And what a political boon for the Commonwealth, no longer to suffer in the blame game if citizens in a particular state feel that hospital and health services are deteriorating, or that they are better in Victoria than they are in Tasmania. Or if school standards or outcomes are worse in Queensland than in South Australia, or that NSW has decided not to maintain its road infrastructure because its premier would prefer to spend the money on fun fairs, footfall stadiums and funiculars. That's quite apart from the billions that will represent net savings after the Commonwealth has dispensed with more than 80,000 public servants, in the states as well as in Canberra, hitherto involved in wasteful work second guessing state public servants on matters such as education, hospitals, healthcare, consumer affairs, and the war against terror – the latter surely a perfect example of Commonwealth intervention in a field not explicitly granted to it by the constitution, and perfectly capable of being done (and probably more effectively) by the states.

No doubt the odd state will gallantly bear up, for the greater good, to the mild burdens created in their states as the new systems and formulas accentuate the disadvantage of the poorer regions, and increase the natural advantage of the richer ones. And the chief ministers and premiers will understand that the Commonwealth's implied offer of a new host of functions (and, possibly, revenue) is without any secondary motives whatever. In such a context, the fact that the Commonwealth is budgeting to reduce programmed increases in financial assistance to the states in their (pre-federation reform) forward estimates by a net $80 billion must be seen as mere coincidence, not as evidence of bad intentions.  

Abbott has nowhere used words suggesting that he is seeking to reform federation by constitutional referendum, or legal means. Indeed, as he might see it, there would be no need, since the states would have no complaint, as they usually do, about the Commonwealth's taking, directly or by attrition, powers and functions that properly belong to the states. So far as the Commonwealth might be seeking binding agreements, whether as to the transfer  of money or new taxation agreements, he might think that he can negotiate bilateral agreements, or agreements at COAG, using the existing (but to be much diminished) Commonwealth power of the purse.

Yet there is an air of unreality about it all which suggests that Abbott is simply pretending, in the process pandering to those minimal-government sentiments of his party's economic conservatives which having little intention of surrendering any real power, least of all to the premiers. Abbott himself is at heart a centrist and a big-government man, even if he recognises both the federalist and the small-government sentiments which inspire some in the party. He has been willing enough to mouth their slogans, or their visions of an absolutely free and unconstrained market at some time far away, but he has not articulated policies or programs which see smaller Commonwealth roles in social welfare or regulation of the economy.

It is all somewhat reminiscent of a item in the diaries of Frederick the Great: ''The Abbe de St Pierre sent me an excellent treatise on the means of restoring peace to all Europe and on the manner of preserving it continually. The thing is exceedingly practicable, nor is anything, except the consent of all Europe, and some other such trifles, wanting for its accomplishment.''

Political theatre of this sort comes fairly cheap, at least until oppositions begin raising the spectre of a program to reduce services.