States of denial

Bernard Keane at Crikey picks at the scab of the federalism question:

Those of us who’ve worked on COAG agenda items over the years have no faith, and little illusion, about the capacity of governments to work together, particularly when they are of different political persuasions. There are only two circumstances in which COAG works effectively — when the Commonwealth has sufficient cash to bribe the states to comply with reforms, or when the states are led by visionary reformers who can see beyond the next media cycle. There are no such leaders among the current generation of politicians. Former Victorian premier Steve Bracks was the last of them.

Nor is there much in the way of spare cash floating around with which to bribe the states.

There may be those on the Liberal side who think everything will dramatically improve once there’s a Coalition government in Canberra and COAG meetings become a conservative love-in marred only by the presence of pesky but unimportant Labor leaders from South Australia, Tasmania and the ACT — and the first two are unlikely to be around for very long. If they had a word with Labor people who were around for Kevin Rudd’s COAG meetings, they might get a reality check. Removing partisan differences only removes one of the impediments to an increasingly sclerotic process. This is partly because the most significant economic reform challenges no longer lie in the federal government’s area of direct responsibility, but in the “human capital” space, around education and health, where the states traditionally have a much greater role than the Commonwealth.

Federalism can work, but you’d have to be mad (or John Brumby) to suggest that it works in its current form in Australia. The gulf in incentives, responsibilities and powers is simply too big, brought about in large part by the creeping centralisation of power to the federal government over the last century.

The point of having states comes from the well-founded suspicion that centralising power leads to policies that are ill-attuned to local concerns. The idea is that rather than having one national government, a federation of states can more responsive to the specific needs and circumstances of their local populations. Large though the distance is between the state and federal governments, it is dwarfed by the distance between governments of all stripes and their citizens. Any reform ought proceed from that acknowledgment.