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What to do with The States

December 22, 2010

If the states lose the power to set mining royalties as a result of a Federal resources tax, chalk up another milestone in the loss of their fiscal autonomy. They lost control over taxes on alcohol, petrol and tobacco ( 1997 High Court decision ) and the GST locked them behind Canberra even more , leaching their capacity to set their own budget priorities. The court more recently confirmed their loss of power over industrial relations and the Canberra bureaucracy will now run school curricula ; in a caricature of how federal and state governments should share responsibilities John Howard funded school chaplains and school flagpole programs.

Meanwhile the states struggle to invent grown-up things to do with NSW boasting an Assistant Minister for Veterans’ Affairs ( what do they do ? sweep up the wreaths ? ) and Victoria under John Brumby a Minister for Respect ( what next ? a Queensland Minister for Modesty or a Tasmanian for Thrift ? ). Sure they still run land use planning and development approval, police, gaols and public transport but- hang on- is this anymore than five ministers ? Here then is my first proposal : have COAG settle on a plan for no more than five ministers in any state government in 10 years time.

As for plainly under-employed backbechers : put them on a third of their current pay and accept their role as part-time not full-time MPs as in many US legislatures.

My own preference is for a lively sharing of powers in a Federal system. I don’t think the Canberra bureaucracy has shown it can run anything better than seasoned state public servants – the examples of detention centres and pink bats make the point. They will even bring the wrong body home from Iraq, the kind of mistake that would generate a Royal Commission if duplicated in any of the state hospital systems. But the trend is now unarguable, the drift to the centre more pronounced than has occurred in any other federal system .

Now’s time to fly the white flag of surrender although let’s hope the centralising stops before we get Gauleiters or prefects appointed by Canberra to run the states . The loss of so many meaningful functions, gathering pace under Howard, is simply embarrassing. Let’s go for compact state cabinets and part-time legislators more appropriate to the rapid shrinking of state functions than the sprawling imperial clutter we’ve inherited from the time they did most of the governing.

  1. Anonymous permalink
    December 22, 2010 8:23 pm

    I’ve long suspected that the only truly enduring Rudd legacy will be an intended or unintended consequence of his strong-arming the states to bind their remitted GST revenue to health spending.

    That, surely, is long-term code for making a higher GST popularly palatable.

    Recall: Hewson’s Fightback! GST was 15%, proposed and electorally defeated in 1993.

    Howard’s GST is 10% (or, more accurately, one eleventh of the sale price of a given good or service).

    That would be the GST we’d “never ever” have; Howard said that in May 1995, attempting to kill off rumours he would revive Hewson’s (let’s face it) sensible idea.

    Anyway, the states lost the power to tax income (the fairest of all taxes). Yet the states provide the expensive, and ever-more expensive, educational, policing, and health services the citizenry expects. To their general credit, the states, quite responsibly, do it only to the degree they can fund it.

    Prediction: that’s why Rudd’s legacy will be a higher GST.

  2. December 22, 2010 8:24 pm

    I agree with your sentiment here. Although, what about local councils? Surely their jurisdiction/power could be increased to take up this slack (with appropriate safeguards)? Or somehow combining these two levels.

    I would hate to see the states lose power to the feds, but as you highlighted the loss of certain powers to the feds may see an end to the relevancy of State Govts.

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