Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

It will come as no news to other senators in this place that I have a longstanding commitment to our federation. The Australian Constitution was founded on a very sound principle of clearly delineating responsibilities for the Commonwealth, with matters not specifically mentioned in section 51 of our Constitution held to remain the responsibility of state governments. This was not an accident of design. It was a clearly thought-through element of systemic protection, which drew heavily on the American experience.

I have spoken previously in this chamber of the powerful influence that James Bryce's book The American Commonwealth exerted on many of the delegates who attended the constitutional conventions of the 1890s, which created the document that continues to underpin our system of government today.

Bryce's work comprehensively catalogues the numerous benefits that flow from a system of government that clearly divides power between a central national government and state jurisdictions, which, by definition, are closer to the people and, accordingly, have a better capacity to appreciate and respond to the more immediate day-to Australia.

As a Western Australian I can say—and I am sure that other Western Australian residents would also say—that this is more than a constitutional theory; it accords with our own lived experience. There is a reason why Western Australians were initially reluctant to join the Federation in the lead-up to 1 January 1901.

Likewise, it is not an accident that at each attempt a federal government has made to alter the Constitution in a fashion designed to grant increased powers to Canberra, the yes vote in Western Australia tends to be noticeably lower than in other jurisdictions.

I realise it is something of a cliche, but the fact remains that Western Australia is a very different place from Australia's eastern states. Our geography orients us toward the Indian Ocean, rather than the Pacific. It is cheaper and faster for Western Australians to travel to Bali, Singapore or Kuala Lumpur than to some of our key eastern-state centres.

Western Australia exports 46 per cent—almost half—of Australia's total exports. Some estimates indicate that by the end of this decade that figure will be closer to 60 per cent. Seventy-three per cent of all Australia's exports to China come from Western Australia.

As I have said on previous occasions, Western Australians understand that we are part of a nation, a Federation. However, I believe that that Federation is big enough and mature enough to account for the fact that there are distinct cultural and economic elements in each of its constituent parts. There is no doubt that there are changes and challenges within our Federation. It has its problems. However, my view is that these problems have not emerged because of the design of our federalist system, as some would suggest. Rather, these problems have arisen because of political imperatives—a desire by federal governments of both political persuasions to overreach, to gather more power into their own hands, at the expense of the states.

I think that what had sometimes been forgotten in this centralist zeal is that, when you take powers from the states though the power games that have been fashionable over recent decades, it is actually the citizen you disempower, not the state government.

After all, state parliaments still exist, state parliamentarians continue to draw salaries and state public servants still have jobs. In practical terms, they have lost very little. The big losers have been the residents in our states, most particularly in my home state of Western Australia, who have had to deal with services increasingly being run from a distant national capital that does not understand the day-to-day needs of our communities.

Accordingly, the question those of us in this place need to deal with is the manner in which we address this challenge. As I see it, there are really two pathways to reform. One way—and I know it has had a number of fans on the other side of the chamber—is to abolish state governments altogether.

Former Prime Minister Bob Hawke, along with other senior Labor figures, is on the public record as favouring this radical course of action. During its time in government, under former Prime Minster Kevin Rudd, Labor promised to end the blame game. In the lead-up the 2007 election, when Mr Rudd was in his 'economic conservative' phase and those opposite were keeping their real views about their leader under wraps, this was portrayed as an honest desire by the Labor Party to work with the states.

Yet, once safely in The Lodge, it quickly transpired that what Mr Rudd had in mind was a series of federal takeovers, taking over hospitals and schools. Mr Rudd, with hands on levers, was going to cure all our ills by taking personal charge of them. And what did he create? An almighty mess, one that was so bad that his colleagues were forced to end his political career.

Time and time again, Australian history has demonstrated that there is simply no evidence that the Commonwealth government is any better at service delivery than the state governments it seeks to usurp. Indeed, our experience in Australia has repeatedly demonstrated that the Commonwealth is actually very bad at service delivery.

That is the reason we saw former Prime Minister Kevin Rudd in the witness box today, delivering evidence at a royal commission into the role his bungled home insulation scheme played in the deaths of several young Australian workers. That is what happens when the federal government starts trying to micromanage.

So why on earth anyone capable of learning the lessons of the past would view the abolition of the states and handing greater power to the Commonwealth as a solution is beyond me. As I said earlier, it is my strongly held view that the way forward for Australian federalism is to adhere more closely to the intention of its original design.

As a member of the Senate Select Committee into the Abbott Government's Commission of Audit, which has been conducting an inquiry into the National Commission of Audit, I have taken a keen interest in the commission's report. Understandably, given this is budget week, much of the public attention on the report has been on the budgetary recommendations contained within it. However, I think an equally important part of the commission's lasting legacy will be the series of recommendations that it has made in regard to our particular brand of federalism in Australia.

In the lead-up to last September's federal election, the Abbott government gave a commitment to produce in its first term a white paper, looking at the future of Australian federalism in modern Australia. As the government has indicated, the recommendations contained in the report from the National Commission of Audit will feed into the preparation of that white paper.

The commission's final report contains a number of very worthy recommendations that, in my view, have enormous capacity to strengthen our Federation and start to reverse what had, over recent decades, seemed to be an inexorable and unwelcome drift towards centralism.

As the commissioners noted in the statement issued at the time of the release of their report:

The Commission was asked to examine Commonwealth/State relations. It has made recommendations to reform the Federation and to devolve as much as possible to the States which is the level of government closest to the people.

It has also recommended the elimination of costly and ineffective duplication and a reduction in the significant administrative burden the Commonwealth imposes on the States through hundreds of COAG agreements. The States should be sovereign in their own right if Australia is to return to the Federation and Constitution which have served the country so well.

As a proud supporter of our Constitution, I was very pleased to read those last few words.

I am very pleased that the budget that the Treasurer handed down last begins this important task of reforming the Federation. I look forward to the white paper on federalism, which I think will represent a once-in-a-generation opportunity to actually put federalism to work for us in building a stronger economy and in delivering better-targeted and better-resourced services for communities.

Yes, the Commonwealth does and will continue to play a role in funding those services but, as a Western Australian, I was especially pleased that the National Commission of Audit highlighted opportunities to do this in a more effective way.

The commission has recommended that the states have direct access to a portion of income tax generated in their economy and that this be offset by a reduction in tied grants. That will be subject to further examination by the government in its taxation and federalism review process.

Also recommended was pro rata distribution of the GST, with top-ups to the states that require some extra assistance. As a Western Australian, this is an issue close to my heart. In my first speech to the Senate two years ago next month, I urged my party to rise to the challenge of dealing with this prickly political issue. I renew that urge this evening. Yes, I am mindful of the statements the coalition took to the last election—that no changes would be made before the next election—but I am also conscious of the sensitivities of other states on this issue. It is complex and arriving at a satisfactory outcome will take time, but that time must begin now.

People will be alarmed to hear that Western Australia is on a trajectory towards receiving just 11 per cent return on its population share. On current trends, by 2017-18— (Time expired)