The Big Restructure
For decades, governments have been kicking the can of Federation reform down the road. Failure to address this is no longer an option, says Tim James.
Our Federation has served our nation well. It remains strong and stable, especially compared to other systems of government around the world.
But it is not perfect, and if we were to start a new Constitution today, it would likely be quite different. Among other flaws, it would need to address the duplication, difference, cost-shifting, blame-laying, gaps and inefficiencies that abound across our three levels of government.
Today, 25 million Australians are counting on their representatives to make government as efficient and effective as can be. This is doubly important as the world is moving faster than ever. We need federal and state governments to work smarter together for our country to prosper.
Few leaders in recent times have had the courage to challenge the status quo in our system of government. The Abbott Government, notably with a mandate to do so, was working towards a Federation White Paper until Malcolm Turnbull brought it to a halt in early 2016. And for all the talk that the Rudd Government would attempt reform, little actual reform eventuated.
Reviewing the structure and efficiency of our Federation has been on the backburner for too long.
Recent statements by federal Treasurer Josh Frydenberg and his NSW counterpart Dominic Perrottet in NSW suggest this malaise may soon be over.
Josh Frydenberg and Dom Perrottet.
In the Sir John Downer Oration this week, Frydenberg outlined ideas and plans to make our federation work better for all Australians.
The MRC has always advocated reform where necessary. In August, we pointed out one of the key areas: “The answer is productivity. More than any other factor, productivity is the key to growth. Other forces, such as population and participation in the workforce, matter but none more than productivity.”
Encouragingly, we can see the Morrison Government’s blueprint for productivity reform coming into focus. The nation’s Treasurers, led by Josh Frydenberg, are showing signs of greater understanding, co-operation and action.
The Treasurer’s speech this week focused on the Federation and described productivity as a “national imperative”. It outlined some actions underway: in heavy vehicle road reform, skills, health, environment and resources, among others. There’s a lot more to do but these plans represent progress.
NSW Treasurer Dominic Perrottet has also staked a claim to Federation reform. He’s established an independent panel headed by business leader David Thodey to conduct the NSW Review of Federal Financial Relations. The panel has just released its first discussion paper and raised a range of ways states and the Commonwealth can work better.
Perrottet is right to say that for him “an eternal frustration” is to see federal funding effectively going across borders to benefit less reform driven and fiscally responsible states. Productivity must be a key factor in federal funding.
It’s time to realise that our Federation is, as the Treasurer declared this week, a “handbrake” on our productivity. Federation reform is not for the fainthearted. Others have tried and failed, or just not tried. But the flaws have now become so widespread that failure to address them is no longer an option. Productivity must grow.
Encouragingly, the nation’s Treasurers look more and more likely to take on this challenge.