Peter Costello's New Federalism

Peter Costello has proclaimed that, if it ever comes (and the Prime Minister stops going back on his word), he will make Federalism an election issue, including the complete takeover of such things as health, education and infrastructure. Not surprisingly, the states ain't happy.

Costello's push continues a trend under the current government, and one that's not popular with everyone. Coalition MP Bronwyn Bishop even argued that such a move would be tantamount to `socialism'. And if it's one thing we can't have, it's socialism, it's bloody unAustralian. But seriously, it's often forgotten - especially recently - that equal power between State and Federal governments was enshrined in the Constitution at Federation. Today, an increasing level of power is being apportioned to the Federal Government, and some elements would prefer even more.

What allowed the shift to occur? Primarily, Australia's system of government, which, given that it combines elements of the UK and US's parliamentary structures, is sometimes called the `Washminster system'. The hybrid of a system which enshrines strong executive powers with state-based Federalism has always contained tensions, and it was almost inevitable that the Federal government would - as it is in the US - become the dominant force, even despite such measures as the establishment of the Senate as (ostensibly) the State's house. We have now moved so far from this concept that the Labor-controlled States are technically represented by a Coallition-controlled Senate.

States themselves have also handed over a fair amount of power - industrial relations in Victoria, income tax collection in all states during WWII. Partially as a result of the latter, states now face a rapidly shrinking taxation base. People continually demand better services, more reliable public transport, well-staffed hospitals and safe roads. However, taxes are unpopular, and people don't want to pay them, so they are cut or reduced in reaction to the pressure of the public and lobby groups. Poker machine tax and housing stamp duties are two examples. And, as the NSW Government in particular argues, the Commonwealth Grants Scheme was established before Queensland and WA began hitting above their weight economically.

Nevertheless, Australians appear nervous about centralisation. The fact that state Labor governments are just as entrenched as the Federal Coalition is a demonstration of this. The demands of say, the Northern Territory could not be met by a one-size-fits-all approach. It could even be argued that the States, to a certain extent, have been pushed into the role of houses of review. In some cases, State-based laws have been passed to mitigate the impact of Federal laws - WorkChoices is a good example. At the very least, they provide a counterbalance to centralised and overweening power.

Nobody would argue that elements of the relationship need to be adjusted and standardisation would help in some areas given the changes that have occurred since Federation. But if Costello is serious about changing the Constitution that monarchists endlessly tell us `ain't broke', it is more likely that he will face well-founded concerns about the Coalition government's increasing desire for power, not support. The fact that the system is not working is not an argument to dismantle it, but augment it.