Reform of the federation What do Australians want… and what do they need? A J Brown Professor of Public Policy & Law 2016 Future of Local Government National Summit - Melbourne

Federalism Regionalism & Devolution ‘Australia’s biggest political problem’* * Tony Abbott, Battlelines (2009), p.110

Federalism Regionalism & Devolution Future of Australia’s Federation Survey 2015 – Federal, State/Territory, Local officials NSWVicQldWASATasACTNTTotal Federal government agencies(Response rate)(14%) State / Territory government , agencies(Response rate)(13%) (4%*)(41%)(36%)(53%)(39%)(30%)(14%) Local government Elected CEOs & staff Total ,906 Australian Constitutional Values Survey 2014 Stratified random national sample of Australian residents, aged 18 years and over Conducted by telephone by Newspoll Limited – 19 August - 2 September 2014 (n = 1,204) Results post-weighted to ABS data on age, highest level of schooling, sex, and area Australian Research Council Discovery Project DP ‘Confronting the Devolution Paradox’ -- Griffith University, University of Sydney, University of New South Wales, Australian National University, Lafayette College, University of Texas

Federalism Regionalism & Devolution Satisfaction with Australia’s current federal system

Federalism Regionalism & Devolution How should the system look say 20 years from now?

Total Public Sector Surplus (+)/Deficit (-) - % of Gross State Product (GSP) Source: T Makin, Sir Samuel Griffith ‘State of the Federation’ Symposium 2014

‘In , the Commonwealth Government has committed to work with States and Territories to produce a White Paper on the Reform of the Federation which will’: clarify roles and responsibilities to ensure that, as far as possible, the States and Territories are sovereign in their own sphere; reduce and end, as far as possible, waste, duplication and second guessing between different levels of government; achieve a more efficient and effective federation, and improve national productivity; make interacting with government simpler for citizens; and enhance governments’ autonomy, flexibility and political accountability.

Federalism Regionalism & Devolution Roles & responsibilities – number of policy areas that should be shared or divided

‘Principles and criteria to be applied when allocating roles and responsibilities between different levels of government, such as: 1.Subsidiarity, whereby responsibility lies with the lowest level of government possible, allowing flexible approaches to improving outcomes; 2.Equity, efficiency and effectiveness of service delivery, including a specific focus on service delivery in the regions, 3.‘National interest’ considerations, so that where it is appropriate, a national approach is adopted in preference to diversity across jurisdictions, 4.Accountability for performance in delivering outcomes, but without imposing unnecessary reporting burdens and overly prescriptive controls, 5.Durability (that is, the allocation of roles and responsibilities should be appropriate for the long-term), and 6.Fiscal sustainability at both Commonwealth and State levels.’

‘Benefits of federalism Federalism is regarded as one of the best systems for ensuring government is close to the people while also dealing with the competing pressures produced by globalisation. Four major benefits of federal systems are summarised below. (i) Regional governments are ‘closer to the people’. Regional governments are arguably more within the reach of their communities than the central government and are more responsive to the specific needs of their communities, allowing policies and services to be customised. 85 ’ ‘85 However, in a large country like Australia, often rural and regional communities can feel just as disconnected from the concerns of a State and Territory government as they do from the Commonwealth Government.’

Federalism Regionalism & Devolution Local officials Federal officials State / Territory officials Highest state Lowest state More state/territory and local input into COAG meetings; e.g. timing, chairing, agendas (SA) 3.1 (Tas) More consultation with non-govt stakeholders in intergovernmental decision making (Qld) 2.9 (NSW) More opportunities for parliaments to scrutinise intergovernmental agreements (Qld) 2.7 (Tas) More support for parliamentarians… from different jurisdictions to work together (Qld) 3.2 (Vic) More support for collaboration between federal and state/territory agencies working on similar issues (NSW) 3.6 (Qld, Vic) More support for direct collaboration between similar agencies in different states / territories (SA) 3.5 (NSW) More support for ‘on the ground’ cooperation between agencies at local or regional levels (Qld) 3.4 (SA) More intergovernmental taskforces (Qld) 2.4 (Tas) More joint agencies involving different levels of government (Qld) 2.8 (NSW) More training for public servants in how to collaborate between agencies or levels (Qld) 3.1 (SA, Tas) Reforms now – for cooperation & collaboration 4321 Extremely desirableVery desirableSomewhatUndesirable

Federalism Regionalism & Devolution Local officials Federal officials State / Territory officials Highest state Lowest state Allow state governments to raise much more of their own revenue (WA) 2.6 (ACT) Allow local governments to raise much more of their own revenue (WA) 2.2 (SA, Tas) Provide guaranteed shares of federally collected taxes to other levels of government (Vic) 3.3 (Tas) Distribute federally collected taxes to the states on a strictly per capita basis (WA) 1.3 (Tas) Increase and/or expand the GST (NSW) 2.4 (WA) Give much more federal financial assistance to states as untied grants (Vic) 2.9 (Qld) Give much more federal financial assistance to local governments as untied grants (SA) 2.4 (Tas) Reduce reporting requirements for federal tied grants given to state or local government (SA) 2.4 (ACT) More flexibility for agencies at different levels to pool funds for shared local or regional priorities (SA) 3.2 (ACT) Maintain or increase federal control over state government spending (ACT) 1.5 (Vic) Reforms now – financial resources & relationships 4321 Extremely desirableVery desirableSomewhatUndesirable

Federalism Regionalism & Devolution Australian members of parliament (serving) 2015 (n=201) ‘ A number of options have been suggested for improving financial resources and relationships of Australian governments. How desirable are the following reforms?’

Federalism Regionalism & Devolution The future for reform of the Federation? 1.All the imperatives remain. 2.Never had to be a once-and-for-all White Paper… what was and is needed is a properly considered, medium-term process. 3.Practical lessons from the process can help redefine the new 21 st century sharing of responsibilities, roles and resources. From health, to infrastructure and cities. But… 3.No overall theory or principle in place of ‘sovereign spheres’… reversion to a fragmented, ad hoc approach, with no real durability? 4.Citizens need to be made central to the process – as citizens and communities, not simply as clients or consumers of public services. 5.No independent champions or evaluators to lead/support true reform. 6.Devolution a key need and opportunity: but local government typically not ready to maximise; a more strategic approach needed.

Federalism Regionalism & Devolution What should local government do? 1.Resume the campaign for federal constitutional recognition of local government – as part of a federation reform agenda 2.Conduct its own high level, national review of its own future: mission(s) / roles resources & structures 3.Identify and fill governance voids/deficits on a more strategic basis (regional level – metro and rural) 4.Upgrade integrity systems, commencing with removal of structural conflicts of interest (full-time elected officials) 5.Set a target (or targets) for fixed share of public funding for local and regional levels, as part of the main federal financial framework, commensurate with: current responsibilities predicted responsibilities ideal / intended responsibilities