David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

In the last 24 hours there has been an announcement about the federation white paper and its terms of reference, and it is a very welcome development. If you recall, I spoke about this very issue in my maiden speech, and I have discussed it with the Prime Minister in many venues over many years. And I am pleased to see that this coalition government has recognised that we do have major problems with the way our federation is working. It is so timely that it has been announced so recently, just after the issues of the Scottish referendum, the issues with a state's—or, in this case Scotland's—level of governance and income. It is a very topical issue. It is a barbecue stopper. How many times have you been at an event where people say, 'This level of government is a waste of space; we should get rid of it'? Whether it is state, local or federal, it is an issue that reverberates around the country—the cost shifting, the blame shifting, the confusion and the duplication of services are very frequent and very well known issues for anyone who has been involved in local government, state government or federal government.

There are labels bandied around of 'vertical fiscal imbalance' and 'horizontal fiscal equalisation'. They are all fancy terms that refer to the fiscal dominance of the Commonwealth. When the emergency of World War II was upon us, we were a nation. The Commonwealth had to fund the war effort, so we made changes. The Constitution was set up, and there were only so many sections that decided who got the taxing powers. But it has gone beyond that, because when the Constitution was founded we did not have things like the welfare state, we did not have things like Medicare and we did not have unemployment benefits. We did not have half the things that the Commonwealth has assumed. So, we need to get together with the states and discuss the best way to work out the finances that the states run on and the way the Commonwealth runs. And we can have three levels of government. You do not need the barbecue's simplistic response that 'This is a waste of space; we should get rid of local government'.

As Bob Hawke alluded: what do the states do? Should we get rid of them? That comes up every now and then, but this is a golden opportunity for us to get together and define who is responsible for what. That in itself will save the nation billions and billions of dollars every year. Why is it that at COAG we have this argy-bargy every year over who gets what? We should be able to get together and work out who is responsible for health. Historically, the states have run hospitals, they have run ports, they have run roads, they have run railways. That is because they were doing it for 50 or 60 or 70 years before Federation. But, since Federation happened, a lot has developed in the country that has not been easy to define by the Constitution, which is the reference document, and section 51, I think it is—I am no constitutional expert—has guiding principles. But life has become much more complex.

This is a very welcome initiative. I think the important thing is to deliver the funds or come up with a formula that delivers funds so that local governments are sustainable, state governments are sustainable and the federal government's responsibilities as a nation can all be exercised. Unfortunately, in the Constitution we as a federal government do not have primary responsibility for local government. It is being created by the states. But it is part of Australia, and we cannot ignore that fact, so we have to have, in this white paper, a clear delineation of who is responsible for what—who runs the schools, who runs hospitals, who is in charge of roads. And a central collection of taxes is essentially a very logical principle. When people talk about states that are failing, generally they are not referring to Australia, but some of them cannot meet their obligations.