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The New Federalism

June 24th, 2013 by Viv

By Viv Forbes, October 1990. First published in Business Queensland, 1990.

The last major item on Bob Hawke’s secret agenda of unfinished business is to arrange for the funeral of federalism. He has already chosen the dirge – it is called “The New Federalism”.

In a world which daily reveals the political depravity and economic bankruptcy that follows the centralised command of society, too many in the ALP still cling to the out-dated vision of “Wagon-wheel Australia” where everyone prostrates daily facing the billion dollar Parliamentary Palace in Canberra.

Australians have inherited two destructive dogmas from our convict and colonial past.

The first is that governments should enforce equality, irrespective of considerations of liberty, justice, or property.

The second is a fear of markets and of non-conformists and a naive belief that centralised regulation by politicians will achieve a better result than decentralised decisions by diverse market operators.

Sovereign states, especially those which develop maverick reputations, are a constant irritant to those who favour enforced equality and bureaucratic control.

Federation has undoubtedly been a failure for Australians.

The chief reason for federation was to enable the states to present a united front in things such as defence and foreign affairs.

However, our defence is laughable and Canberra’s power to control foreign affairs has been grossly misused to enable the Commonwealth to intrude into many areas specifically denied it by the constitution. Federalism has given us a swollen, distant, expensive and interfering bureaucracy, a lawless government and a federal army only twice as large as the Australian contingent sent by the separate states to the Boer War (despite a five-fold increase in population).

True federalism, in which no single parliament or government body holds complete power over any person or business, is favourable to democratic freedoms, to competitive economies and to the sharing of power. Business everywhere, especially business in Queensland, should be concerned to protect the best elements of federalism and to attack only its centralist tendencies.

Mr Hawk launched his “New Federalism” in July by announcing a special premiers conference to “cut duplication” and provide federal funding for a special constitutional committee headed by Sir Ninian Stephen.

Mr Hawke spoke about co-operation and consensus but, as with most political flap-doodle, what was not said is more important than what was said.

What Consensus Bob omitted to mention was that Sir Ninian, in his final address as Governor General, declared his firm preference for the disappearance of state governments. He also failed to mention that as ACTU President he himself described Australian federalism as “absurd folly”. So much for the impartial review.

Mr Hawke also spoke with deep feeling about the high cost of duplication. What he did not say was that his preference for removing duplication was to dissolve, absorb or over-ride all state government functions.

We can now expect lots of federally funded studies from “unbiased” centralists into the costs of duplication and the stupidity of different standards.

The PM likes to quote non-uniform railway gauges or education standards as a ludicrous result of federalism. In fact, the non-uniformity is caused not by federalism, but by state monopoly ownership or control of the rail and education industries. One major aim of Federalism was to prevent individual states from hindering free trade between states. Exclusive state monopolies such as Queensland Rail are offensive to this sensible federalist principle.

Coerced uniformity is a positive evil, whether practiced by federal or state governments. It smothers diversity and competition which are the tools of discovery and innovation and the passports to “The Clever Country”. World industries such as cars, cameras, computers and videos achieve whatever degree of standardisation and diversity the markets demand without any World Standards Regulators. Railways and schools would have developed similarly diverse but voluntary Australia-wide standards were it not for rigid legal monopolies operating within strict state borders.

Many people fail to distinguish between duplication, which is bad, and decentralisation, which is good. Duplication occurs where we have both a state and a federal department of health, resources or whatever.

Decentralisation occurs where the Commonwealth eliminates duplication by vacating the field entirely, leaving it to those people who are closer to those who use, pay for, or are affected by the taxes, regulations and controls they impose.

The essence of federalism is decentralisation and it is the only system suitable or acceptable to huge, diverse nation-continents such as Australia, USSR, USA or the EEC. Any attempt by the more populous states to enforce tight central control on scattered minorities will result in discord, secession and eventually revolt.

The role model for Australia must not be “One huge telephone company” so beloved by the Marxists, but a people-controlled confederation such as Switzerland. It should include the people’s right to veto any act or regulation.

Politicians always fear referenda, with good reason. When consulted, the people monotonously reject proposals which enlarge central power or which benefit sectional interests, no matter how cunningly they are wrapped in pretty words such as “consensus”, “co-operation” or “the national interest”.

The effective conquest of federalism by centralism has been achieved by a combination of brinkmanship (federal income tax as an emergency war time measure), bribery (conditional federal grants), deceit (referenda designed to achieve more than was obvious from the words) and unconstitutional legalism (external affairs powers). This process was assisted in recent years by a heavily politicised and centralist high court. Four men, all centralists, played a major role in this defeat – Dr Evatt, Lionel Murphy, Malcolm Fraser and Gareth Evans.

The destruction of Federalism has gone too far, and we must start the repair. The first step should be a crash program to eliminate duplication between federal and state public services.

At least 13 federal government departments directly duplicate state functions. These include the departments concerned with agriculture, environment, health, labour, manufacturing, consumer affairs, transport, tourism, regional planning, decentralisation, education, housing, media, minerals and energy. In many of these areas, the commonwealth has no clear constitutional powers.

Many would question whether government has any role in these areas. There is no question, however, that duplication should cease. This should be done by placing these activities plus responsibility for funding them in the control of those state or local communities most concerned with their scope, cost and efficiency.

This will have numerous beneficial effects. It will reduce federal spending and taxes, cut inflation, slash red tape and provide a great boost to decentralisation and diversity. It may also be the best chance for saving the federation from severe strains in the years ahead.

Federation has given Australia the longest cows in Australia – fed on the mines and farms of outback Queensland and milked in Brisbane and Canberra.

Business in Queensland must ensure that “The New Federalism” does not result in centralisation of all milching, in Canberra. Unless we are vigilant, every business in Australia will be not only answerable to Canberra, but also dependent on Canberra for its survival.

We may even need a Federalist Party to defend the Australian Constitution before this century ends.

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