Expensive way to run a country

Structural problems of this kind are a substantial limitation to progress. In shaping what governments do, and what they do not do, they affect the quality and cost of government services and have large flow-on effects for business and the wider community.

As the Business Council has recognised, our federal system is preventing the type of government we need to maximise our economic wellbeing. This is rarely acknowledged. After working in an inefficient way for decades it can be hard to see the real effect. It can seem easier to continue within a broken system than to repair it. Nonetheless, as Rudd has recognised, the case for reform is overwhelming.

We should focus on pragmatic, achievable change that lowers taxes and improves the quality of government services. In the short term, there are many things that can be done to improve how our federal system works, such as improving co-operation and looking again at federal-state finances.

During the longer term, we need to address the text of Australian Constitution. If we do not change the rules, through time there will be a tendency for bad habits to resurface and blockages we thought cleared to re-emerge. We need a revised set of rules, indeed a new deal for our federal system.

State leaders from Mike Rann to Peter Beattie have called for a constitutional convention on the future of the federation. Such conventions were the way the Constitution and federal system were drafted in the first place.

Today they offer an old-fashioned but effective way of bringing together a wide range of interests and perspectives from within and outside government.

Fixing our federal system is in the national interest. If the rules of government we live by are improved, we all stand to benefit, whatever our politics. It is a task that requires popular involvement and strong political leadership.