Judi Moylan (Pearce, Liberal Party) Share this | Hansard source

I am very pleased as a Western Australian to have the opportunity to speak on the Federal Financial Relations Bill 2009 and the Federal Financial Relations (Consequential Amendments and Transitional Provisions) Bill 2009. I want to make it very clear that I am committed to a federal system. I recognise that all is not perfect in this system of government and that it is a bit of a movable feast because we are changing as a nation. Like democracy, our system of government is not perfect, but it is probably the best that we can offer in terms of robust debate and robust competition in delivering the very best services to people throughout this vast continent. That is one of the great benefits of a federal system. We live in a very vast continent. Each of our states has its own geography, and life for citizens in the states varies quite markedly. That is why I believe that the state governments are the best people to determine the priorities that will govern their states.

We have in the public gallery people from probably all over Australia. I do not think that they would be well served by having government administered centrally. Indeed, that is not what this legislation seeks to do. It seeks to have a new cooperation in terms of how we manage this great country of ours. The problem is: many Australians see any reform process with a degree of cynicism because we have heard it all before—that is, the federal government announcing that they are going to manage something because it is not working as well as it should be. While this legislation does seek to have new cooperation between the state and federal governments, I think it is still highly prescriptive. It is the federal government calling the shots and saying to the states: we will hand over buckets of money to you but you will do certain things.

I hope that we will continue to robustly debate these matters in this place, because it is through the fires of robust debate that we come to good policy positions. We should never be afraid of that process, no matter how difficult it may get sometimes. I know sometimes the public see this as a very combative exercise, but it is from the fires of robust debate that we come forward with the very best options for governing Australia in the 21st century.

The government have described this legislation as a new direction with modern federalism. The reform manifesto is filled with the discourse of a new era of cooperation. Indeed, it would seem that our Prime Minister has been extolling the virtues of such collaboration between federal and state governments for many years. Behind the rhetoric of cooperation, the reality is clear: state and federal governments are no longer peers. When the drafters of our Constitution began to imagine the shape of Australia’s Federation, they pictured something vastly different from what we are operating under today. They pictured strong states that could hold their own against the federal government. They created distinct areas of responsibility. If they ever imagined that there would be a vertical fiscal imbalance, I am quite sure they never would have imagined it would be as pronounced as it is today.

When we talk about modern federalism, we are essentially discussing the funding arrangements between the levels of government. Since the federal monopolisation of income tax, state governments have been reliant on federal grants to fulfil their constitutional responsibilities. The resulting vertical fiscal imbalance has gradually given the federal government increased power in areas that once were the exclusive domain of the states and territories. I sometimes think that we in this place set the states up to fail in that duty. We sometimes forget that the states have a vested interest in delivering best practice to their constituency because their ultimate report card is when they go to the electorate and seek re-election.

The essence of this legislation is that it will reform the system of funding to the states and territories. There will be three tiers of funding. Firstly, the federal government will distribute collected GST revenues to the states by general revenue assistance in accordance with the principles of horizontal fiscal equalisation. Secondly, all existing tied grants or specific purpose payments will be summarised as payments for key human sector services such as health care and schools. Thirdly, new national partnership payments will be made to those states that reach the incentive targets of service delivery and adopt social and economic reform as laid out by the federal government. So what we have is a bit of a pea and thimble trick: nothing is changing in essence.

It is encouraging to see the government continuing the work of those who went before them and engaging in constant renewal of our federal system. The introduction, indeed, of the GST under the Howard government provided funding for the states, which has been a very significant move forward. It has gone some way to restoring some balance in terms of fiscal relations between the levels of government in Australia in recent times. Any attempts that are made to make the system more efficient will be welcomed. There is no doubt about that. I think everyone will welcome that. But, by setting goals that virtually say one size fits all, we are removing from the states the capacity to be innovative and creative about how they solve the many service delivery challenges that they are confronted with today—and probably more so at the moment, with the global financial troubles that beset us.

Again, it is a welcome move to see the existing system of tied grants which had been implemented gradually over time in accordance with various developments now being modernised. It is also pleasing to see that the state and territory governments who received this money will have some flexibility in how they spend the money. As I said, it is flexibility that will enable innovation to flourish and provide an opportunity for governments to learn from the successes and failures of others as they try to find the best way forward to deliver to their constituencies. However, it would seem that while this bill gives budget flexibility with one hand it is also taking it away with the other. As I said, it is the old pea and thimble trick; it does not really fool anyone. The sometimes coercive nature of specific purpose payments will potentially be replaced by the national partnership payment, and you have to look at that and say, ‘Is it really that much different to what we’ve been doing?’

The key aspects of the bill that I have concerns about relate to the requirement that specific purpose payments are subject to reporting requirements and the national partnership payments require that the state adopt ‘new projects of national importance’ and meet national benchmarks. So I suppose it depends on how these new projects of national importance are determined. Are they determined by the federal government, the state government or in partnership? If it is a true partnership, that has to be a positive move, but I have a great concern about policies that are developed in this place, on a one-size-fits-all basis, for a continent that is so vast and whose peoples are so diverse. I think it does remove that capacity to be innovative.

These measures do demonstrate a number of disturbing trends in the view of the government toward federalism. Firstly, it makes evident the federal Labor government’s new-found understanding of the depth of incompetence of their state Labor counterparts. Secondly, it reveals the desire of the federal government to assume a custodial power over the states. By making the states accountable to big brother federal government, it will no longer be the role of the state voters to hold their elected state representatives to account.

But dictating how the states spend is not what cooperative federalism should be about. Perhaps, as the government tend to do, they have forgotten where the money comes from. It is the taxpayers’ money, and they are distributing money that is not their own but the money of all Australian taxpayers. It is therefore only proper that the taxpayers are the monitors of how that money is spent, and that means giving the states maximum capacity to determine their own policy direction and for the voters to monitor that to see whether the states are delivering what the citizens want. At the end of the generally four-year terms for the states the ultimate sanction is that a party loses government if they have not done the right thing.

The old argument of duplication of services is not necessarily one that cannot be better managed. If there is duplication of services, I think we will find it is because the federal government have taken over or encroached more and more on the areas of the state governments. There is one way to fix that, and that is to go back to the drawing board and to more clearly delineate the responsibilities of state and federal governments. I do not think that it would be too difficult to come to an agreement about just where the demarcation lines are, but it does need to be addressed because things have moved on since the Federation was first established.

Back in 2005 the current Prime Minister gave a speech entitled ‘The case for cooperative federalism’. I have to say that, apart from some of the laughable ideological diatribe that was expressed in that speech, a few important things were said. Some of the more credible things that came from the then shadow minister for foreign affairs, trade and international security were when he said:

The challenge for a future Labor government will be to rebuild the Federation. And it is my argument that the Federation can be rebuilt based on the principles of co-operative (rather than coercive) Federalism.

He went on to say that there needed to be a ‘culture of political cooperation and collaboration as opposed to confrontation and coercion’.

What is important about these statements is that they again truly highlight the level of inconsistency between what the government says it will do and what it actually does. One needs only to look at health care or education to see that this government is much more comfortable with coercion than with cooperation. While the Prime Minister came into office promising to end the blame game, he threatened the states that if they could not agree on a national reform plan for public hospitals the federal government would seize control. This does not sound like mutual collaboration to me.

This government also came to power promising an education revolution. What they did not mention was that, whilst the Bastille they will be storming is that of state control, the federal government’s stimulus package will further demote the responsibility of states. Money will be dished out to schools, with the Deputy Prime Minister having the exclusive rights to any credit for work done. This is despite the important role that states and territories have in administering education and despite the fact that the money used to fund this does not yet exist and, if it did, it would not belong to the federal government anyway. As I said, this is money contributed by all Australian taxpayers. Just last week we heard that the federal government would expand their control over vocational studies. What will the next coercive tactic be to bring the states on board with federal policy? For many people the precise problem with federalism is that there is no clear demarcation as to responsibility.

During the aforementioned speech from 2005, the Prime Minister quoted former Queensland Premier Wayne Goss saying:

It is unacceptable from the point of view of the consumers of government services that we should let confusion reign as to which level of government is responsible for particular government programs.

The design of the national partnership payments is likely to further complicate this issue. How can a member of the public hold government accountable when it is not even clear who a policy belongs to?

See this speech in context