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Regional government can transform Australia

By Mark Drummond - posted Saturday, 15 July 2000

The Head of State issue that has dominated the republic debate is merely one of many relating to our system of government that call for serious attention as we reach the Centenary of Federation.

By taking gainful advantage of the lessons learned, knowledge gained and changes realised over the past 100 years, we are ever better equipped to design a new system of government to reflect current and future needs and aspirations of Australians, and which would be an improvement on the present system in all significant respects.

Australia is both over- and under-governed


On the basis of international comparison, Australia is clearly very "heavily" governed at the sovereign state/territory and commonwealth levels, yet very "lightly" governed (arguably to the extent of chronic neglect) at the local and regional levels.

Whereas our Constitution provides Tasmanians with a state government and 12 Senate places in our national Parliament, most of regional and rural Australia are without a Senator with first-priority concern for their locality. And with local government so powerless in Australia, the 35% of Australians who live outside the capitals are far too often neglected by state and commonwealth governments whose attentions and loyalties are elsewhere.

Our present system suffers from duplicated centralism

The Australian federal system of government has, in practice, yielded what can be described as "duplicated centralism" – a system that suffers firstly because of the extent to which the eight state and territory governments duplicate the work of one another and of the commonwealth, and secondly because federal, state and the Northern Territory governments alike exercise such centralised dominance over the tier of government beneath them (the ACT being the single exception here). Australian taxpayers are lumbered with the salaries of not one but nine ministers and department heads in most areas of government responsibility. Ministers and department heads are only the ‘tips’ - the ‘icebergs’ being the vast state and commonwealth bureaucratic empires. The result is that insufficient funding trickles down to the "coal-faces" of value-adding government service provision – the schools, hospitals and so on.

Australia's state governments are among the most centralised sovereign governments in the democratic world in terms of (1) their constitutional and fiscal dominance over local government, and (2) the capital-city-centricity that arises due to the concentration of population and elected representatives in the capitals and the remoteness of hinterlands from their capital.

While being a federation per se does not necessarily incur additional costs of duplication – such costs can accrue in multi-tiered unitary systems as well – relative to other First-world federations and virtually all unitary systems of government, Australia's mix of powers between the commonwealth and the states/territories is an extremely expensive one. Among the USA, Switzerland, Canada, Australia, Germany and Belgium (six notable federations), Australia is the poorest in per-capita GDP terms, the most distant from export markets, the most sparsely populated, and probably the most critically disadvantaged by the massive costs of duplication among its two highest levels of government.


Our current system insufficiently reflects Australia's geography and patterns of settlement

Australia's wealth has indeed derived largely "off the sheep's back" and from mines, and city folk continue to be subsidised to significant extents by our more profitable agricultural and mining producers. The rural outcry is legitimate and would probably be absent if rural regions were able to retain their profits in full for their own use.

History is important, but a country's system of government must also be assessed in terms of how well and how justly it serves its people – especially its most vulnerable – and how closely it reflects its geography and settlement patterns. The regions beyond the capital cities have never had effective governments of their own to provide the quality of democracy, attention and public service they need and are entitled to.

Whereas Australia's entire population at the time of federation in 1901 was just 3.7 million, nearly 7 million Australians now live outside the capital cities alone.

The fivefold increase in Australia's population since 1901 prompted the late Ken Thomas (TNT's founder) to suggest that we needed an accompanying fivefold increase in our number of sub-national governments - from the eight present states and territories to around 40 appropriately designed regions, including 30 or so centred around our biggest cities.

Regions such as Hunter, Riverina, Illawarra, Central Coast, New England, Central West and Northern Rivers (in NSW), Gold Coast, Sunshine Coast and Far North (in Queensland), and Gippsland (in Victoria), all now host populations as large or larger than those of Western Australia and Tasmania in 1901. Of 192 nation-states in the world in 1996, in terms of land area, only 13 are larger than Western Australia and 20 larger than Queensland; both these states are much larger than the ideal for subnational governments.

Regional governments numbering 40 or so would have an average population approximating that of the Swiss Cantons (our State equivalents) and an average land area approximating that of the 50 United States. Significantly, Switzerland and the USA are probably the most settled and viable federations in the world today in terms of their political geography and wealth.

Our present system impedes internal and external affairs

Constant buck-passing and conflict generally between the Commonwealth and the states/territories, which arises as an unavoidable consequence of our Constitution, imposes unsustainable burdens on our nine sovereign governments, leaving them with insufficient human and financial resources to adequately discharge their constitutional duties.

Commonwealth-state/territory battles regularly take the Commonwealth government's "eye off the main game" in the critical areas of foreign affairs, national security and the national-global interface generally. These same battles, and their associated costs, likewise reduce the states' and territories' ability to satisfy the very real needs of those living within their localities - in both rural and urban areas alike.

Responsibilities of life-and-death gravity such as national security, foreign affairs, healthcare, the environment, policing and emergency services are simply far too important to be allowed to suffer under the weight of our present form of government, which is chronically inward-looking on global matters and neglectful of local matters.

Our present system encourages gambling and discourages employment

Just as tariffs can be regarded as taxes, so too taxes can be regarded as tariffs. The $7 billion in payroll tax that state and territory governments annually collect can be regarded as a tariff 'protection' of federal arrangements in Australia, which apparently could not be sustained if this tax on employment were abolished. The over-enthusiastic pursuit of gambling revenue by Australian governments further underlines the failings of our present federal system.

A system of 40 regional governments can transform Australia

I have estimated that an appropriately designed new system of government, without the states but comprising 40 regional governments along the lines of the ACT government system (but with major powers transferred to the national government) could provide some $15 billion in savings out of the $180 billion or so per annum government outlays at all levels, and some $30 billion per annum out of the $500 billion per annum GDP. These vast amounts are presently wasted due to the friction and duplication occurring "horizontally" among state/territory governments and regulations, and "vertically" between the states/territories and the commonwealth.

The liberation of these billions of dollars per annum in public and private spending capacity, through the abolition of the states and the formation of 40 or so regional governments, can enormously benefit Australia through diverse nation-enhancing and nation-building endeavours.

Such moneys could help pay off the national debt and fund industry, labour market and welfare programs that could simultaneously improve our trade performance, and reduce poverty and unemployment.

Payroll tax could be abolished and the private sector could thereby afford to employ more people even if tariffs reduced in line with APEC targets.

While overall income levels could be raised, many six-figure salaried public sector jobs would become superfluous, and the funds thereby freed up could fund the employment of many more people at average salary levels, providing sustainable reductions in unemployment and the rich-poor gap. We could at last establish uniform national laws and properly address crime, food standards, child protection, and care for the poor, aged and disabled.

Squabbles between state, territory and commonwealth governments, and the expense of resolving them in the courts, could be consigned to history and money would become available to boost education, healthcare and so on, compensate the stolen generation, address the Murray Darling crisis and other environmental concerns properly or fund a large-scale defence force effort if the need ever arose.

The idea of regional government system is not new and has strong public support

The idea to create regional governments is a pragmatic and principled (and not merely diplomatic) synthesis of the ALP's traditional state abolition and regionalisation objectives and the New States movements that were predominantly of Country Party origin and in some cases preceded federation itself.

A growing, albeit still rather loose, network of people is coming together as a formidable advocacy force in support of regional government. And with such strong selling points, who says it can't get up at a referendum?

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About the Author

Mark Drummond is a mathematics and statistics teacher at the Canberra Institute of Technology who completed a PhD thesis in 2007 at the University of Canberra titled Costing Constitutional Change: Estimates of the Financial Benefits of New States, Regional Governments, Unification and Related Reforms.

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