Australian federalism needs major reforms to be effective in the 21st century: Options for reform

This statement comes from the fact that as time has passed by the world has changed and for the Australian federal government in order to be effective it needs to make major reforms and changes. Arguably this statement is shaped by some facts such as globalization and regionalism as well as other major changes and developments nationally and internationally. As political systems face challenges such as policy challenges politicians think of change and reform as a way of tackling these new challenges. Australian federalism has come across some important policy challenges such as water policy, tax policy and other constitutional issues. In this paper it will be argued that federalism needs to go under some major reforms in order to be effective in the ever changing political and economic and social system of the world, particularly at a time where the old system of federalism does not serve the citizens well. It will also be argued that federalism can still be an effective way of governing Australia as federalism has been successful so far, but there are some challenges and problems which need to be addressed. At the end of the paper some recommended options for reform will be discussed and highlighted.

    

In order to discuss federalism and reforms in Australian federalism first the term federalism needs to be defined. Federalism is a form of government system which is used in some important countries such as the United States, the Federal Republic of Germany and the Russian Federations (Lovell et al 1998, p.61). In a federal system, power is divided over existing territories and at least two levels of governments govern the country (Lovell et al 1998, p.61). One is central and the other one is based on state (Lovell et al 1998, p.61). This definition is a general definition, but all federal systems have their own distinctive character. In this case Australian federalism is distinctive from other forms of federalism around the world, although it has borrowed the idea of creating a federal system from other federal countries, particularly USA.

 

Generally federalism is viewed as one of the most effective governmental systems in dealing with "the twin pressures produced by globalisation – the upward pressure to deal with some matters at the supra-national level and the downwards pressure to bring government closer to the people" (Withers and Twomey 2007, p.4).

 

Federalism was first chosen for Australia in 1901 as a way of governing a number of states under one national government. According to Singleton et al (2006, p.77), one major reason for choosing a federal system of government for Australia is "the desire for a political arrangement of convenience, where existing interests and tensions make power sharing imperative if the various groups involved are to come together at all". Historically, the founding fathers chose federalism for Australia to protect the distinct responsibilities which were previously held by the colonies of that time (Singleton et al 2006, p.77). Also they wanted to create a national government in order to take care of issues such as foreign affairs and defence (Singleton et al 2006, p.77). Additionally, at that time federalism was the best option for Australia as arguing on other options was very difficult (Singleton et al 2006, p.77). Federalism has been beneficial to Australia in many ways. Some of the benefits of federalism for Australia are "protection for the individual by checking the concentration of power", "choice and diversity" and many other benefits (Withers and Twomey 2007, p.8).

 

For many years, federalism in Australia has been criticised (Withers and Twomey 2007, p.4). Over time the Commonwealth has used its financial powers as well as increased legislative power to intervene in states and their responsibilities (Withers and Twomey 2007, p.4). Such action by the Commonwealth undercuts the benefits of federalism for Australia and also worsens problems such as duplication and excessive administrative burdens (Withers and Twomey 2007, p.5). While in Australia centralism seems to be the order of the day, in the rest of the world, all steps are taken towards decentralisation and federalism (Withers and Twomey 2007, p.4).

 

Despite many advantages for Australia, federalism has been criticized in terms of "overlap and duplication", "vertical fiscal imbalance", "insufficiencies when individual states have different rules" and "too many tiers of government" (Singleton et al 2006, p.100). It is argued that federalism in this country has not served its citizens well (Fixing Australian Federalism 2008, p.30). There are some internal and external factors which undermine federalism in Australia and pose the question of whether federalism is the best system to govern Australia. External factors are regionalism, a more mobile workforce, privatization of public sector, globalization, internationalization, the republican issue and the difficulty and slow process of making states to implement policies Policy challenges as internal and globalization and regionalism as external factors (Singleton et al 2006, pp.118-119).

 

The following quote by Tony Abbott is a starting point to argue for reforms in Australian federalism. Abbott (2008, p.1) states:

Federalism means that bribing the states is the only way to improve water management in the Murray-Darling basin, to achieve academically-rigorous, national standards in schools or to reform public hospitals. In important respects, the federation is broken and does need to be fixed.

The above quote reaffirms the main statement of the paper which states that Australian federalism needs to go under major reforms. According to Williams, each year the federal structure costs Australia around $9 billion in wasted taxes. The inadequacies and bottlenecks of this structure are a barrier to the future prosperity of Australia (Williams 2008, p.1). The result of a federal system where Commonwealth has control over most of the money and States are in charge of expensive and growing areas such as education and health has usually been "a chronic underfunding of essential public services, along with an unfortunate misdirection of some of those funds, and excessive administrative duplication and red tape" (Williams 2008, p.2). These issues and many more have raised voices to bring about reform.

 

In late 1989, two areas which were "fiscal and constitutional federalism" were proposed to be reformed (Galligan and Walsh 1991, p.4). According to Galligan and Walsh (1991, p.4), these areas needed reform in order for the Australian federalism to continue its vitality in the economic and political environment of the twentieth century. Additionally, Galligan and Walsh (1991, p.15) stress the need for "a fundamental rethink" in Australian federal fiscal arrangements.

 

There are several other recommendations for reform in Australian federalism. For instance Twomey (2008, p.2) recommends focusing on three matters. The first one is "the relocation of powers and responsibilities between the levels of government (Twomey 2008, p.2). Second is the improvement of mechanisms for intergovernmental co-operation and third is the reform of financial relations between Commonwealth and State (Twomey 2008, p.2). In explaining the first area of focus to reform, Twomey (2008, p.3) suggests that matters such as housing, police and education should be under the control of states' governments while national government should deal with matters such as defence, foreign affairs and social security which equally affects all Australians. Twomey (2008, p.5) introduces the third area of focus as the most important and necessary area to reform in Australian federalism. According to Twomey (2008, p.5) two problems exist in that area. The first one is that the Commonwealth collects more than eighty percent of all taxes in Australia, while states' governments are responsible for services such as hospitals, schools, police as well public transport. Therefore, in performing their constitutional functions states remain dependent on Commonwealth grants (Twomey 2008, p.5).

 

The areas for reform in Australian federalism could be summed up as six reform ideas (Fixing Australian Federalism 2008, p.30). First, the roles and responsibilities of states and commonwealth need to be defined. Second, Commonwealth and states must collaborate in national economic reform. Third, the ways in which GST revenue across the states is allocated need to be changed. Fourth, vertical fiscal imbalance needs to be addressed. Fifth, "specific purpose payments (SPPs)" which is given to states from the Commonwealth needs to be reformed. Sixth, state taxation needs to be reformed (Fixing Australian Federalism 2008, p.30). It is stated that the current government is only interested in two of the above ideas to reform which are reform of SPPs and State-Commonwealth collaboration in national economic reform (Fixing Australian Federalism 2008, p.30).

 

Many of the suggested reforms could be achieved through co-operation and the transfer of power in areas necessary (Withers and Twomey 2007, p.5). Withers and Twomey (2007, p.5) also suggest that a constitutional convention could be a useful way to reach consensus on these reforms and to propose any constitutional amendments which could improves and develops the operation of the Australian federation in future (Withers and Twomey 2007, p.5). Singleton et al (2006, p.101) points out that the national and states' governments cooperate in many ways in order to form and implement policies for joint interest, however Abbott (2008, p.1) argues that further and better cooperation is demanded and needed for Australian federalism to perform better.

 

Although Australian federalism needs major reforms, making changes in the constitution is difficult as it has been written in a form which does not allow changes and reforms easily (Jaensch 1994, p.296). Similarly Mathews (1975, p.9) describes the Australian constitution as "inflexible" and points out that the only way to amend it is through referendum. However, Twomey (2008, p.7) suggests that Australia needs to take necessary steps towards reform in its federalism in order to position the country for the future. The current government may take steps towards a cooperative federalism but it is argued that this could be one step further towards centralization with "smiles and handshakes" followed by more Commonwealth intervention in states' policies (Fixing Australian Federalism 2008, p.37).

 

The twenty first century is described as the century for federalism nationally and internationally (Galligan and Walsh 1991, p.4). Internationally, the popularity of federalism is increasing because federal systems cultivate unity through accommodating diversity, and bringing governments closer to their citizens (Withers and Twomey 2007, p.6). It is suggested that federalism strengthens the democratic process through "increasing access to and participation in the political system, and checks the potential abuse of power" (Withers and Twomey 2007, p.6). Globalisation is an external force which influences the ways in which governments around the world function. As Withers and Twomey (2007, p.6) point out that in order to obtain the economic advantages of globalisation the respond of governments around the world to the pressures of globalisation have been joining supra-national bodies as well as decentralising power and granting greater functions and responsibilities on sub-national states and states (Withers and Twomey 2007, p.6).

 

When Kevin Rudd was elected as the Prime Minister of Australia in 2007, he proposed reform in the Australian federalism, however it is still not clear what the Rudd government means by reform as reforming federalism has different meanings for different people (Fixing Australian Federalism 2008, p.30).

 

In conclusion, this paper discussed federalism in Australia and options for reform. It highlighted some of the important areas to reform suggested by many people specialized in the area. It also pinpointed the benefits of federalism for Australia and the reasons for choosing federalism for Australia by the founding fathers. While highlighting the criticisms of federalism the paper argued that federalism is still an effective system of government for Australia as it is made up of smaller states and each state has the capability of governing the citizens while working in cooperation with the national government. In the paper it is argued that federalism is now preferred as the best system of government around the world.

References:

 

Abbott, T 2008, AUSTRALIAN FEDERALISM: RESCUE & REFORM CONFERENCE, viewed 25 December 2008, <http://www.tonyabbott.com.au/Pages/Article.aspx?ID=3672>.

Fixing Australian Federalism 2008, Vol. 24 No. 1, Autumn 2008, POLICY, viewed 30 December 2008,

<http://www.psmprogram.sa.gov.au/wp-content/uploads/2008/07/carling-2008-fixing-australian-federalism.pdf>.

Galligan, B & Walsh, C 1991, Australian Federalism: Yes or No, Federalism Research Centre, Discussion Papers, No.9, December 1991, Canberra.

Jaensch, D 1994, Federalsim Australian Style, in Parliament, parties and people, 2^nd ed, Longman Cheshire, Melbourne.

Lovell, D. W, McAllister, I, Maley, W & Kukathas, C 1998, The Australia Political System, 2^nd ed, Longman, Melbourne.

Mathews, R 1975, Innovations and Developments in Australian Federalism, in Federalism in Australia: Current Trends, Publius, The journal of Federalism, Summer 1977, vol 7, No.3.

Singleton, G, Aitkin, D, Jinks, B &Warhurst, J 2006, Australian Political Institutions, 8^th edition, Pearson Education Australia, NSW.

Twomey, A 2008, Australian Federalism: Options for Reform, viewed 1 February 2009, <http://www.deir.qld.gov.au/pdf/ir/conference/aust-federalism-options-reform-twomey.pdf>.

 

Williams,
G 2008, Now for the hard bit, Australian Policy Online, <http://www.apo.org.au/webboard/comment_results.chtml?filename_num=248188>.

 

Withers, G & Twomey, A 2007, FEDE RALIST PAPE R 1: AUST RALI A'S Federal Future, A REPORT FOR THE COUNCIL FOR THE AUSTRALIAN FEDERATION, viewed 3 February 2009, <
http://caf.gov.au/Documents/AustraliasFederalFuture.pdf >.