Gerard Rennick (Queensland, Liberal Party) Share this | Link to this | Hansard source

Accountability is the bedrock of democracy. Accountability only operates effectively, however, when government roles and responsibilities are clearly defined. Even Australians with little or no interest in the wider political debate are beginning to see that our federation is failing, with a complete lack of accountability due to an endless blame game between state and federal governments, especially when it comes to funding. Australians are not ideologically invested in a debate as to which level of government does what. They do not care who builds roads, teaches their children or defends the nation. They just expect it to be done and done well. In my maiden speech, I said:

Of all the issues faced by Australia, few are more damaging to our country than the fiscal imbalance and ambiguous responsibilities between state and federal governments.

Having been a senator now for more than six months and having witnessed the inability of well-meaning state governments to handle the national crisis in the recent bushfires has only strengthened my conviction on this matter. No-one wants any mistakes or management fails during a critical bushfire season. These issues are above politics, yet constitutional issues continue to place additional and unwanted pressure on our operational response and recovery. This is no doubt in part due to unresolved issues when coordinating agencies and services between different tiers of government. This dysfunction isn't confined only to how we deal with bushfires and other natural disasters; it impacts almost all government responsibilities—federal, state and local.

Acknowledging the problem and offering a solution are two different things. The issue must be brought to a head and action must be taken. I called for a constitutional convention on the matter in my maiden speech. While I am a realist in acknowledging this may not take place without sufficient consultation and build-up, reopening the federation white paper instigated by the Abbott government would be a good start. It outlines several fundamental dysfunctions in the Australian federation that need to be addressed, including insufficient state autonomy, Commonwealth incursion into state areas of responsibility, vertical fiscal imbalance and wastage at all levels. In my opinion, there are two key areas that must be addressed to fix our federation. These are: clearly delineating responsibilities for service delivery between state and federal governments and the imperative need to address vertical fiscal imbalance. National partnership agreements, which help bandaid over the issue of the states' financial woes, only serve to undermine accountability.

The federal government does not operate a single hospital in my home state of Queensland, yet it is attacked by the state government over hospital funding matters when it has very little control or oversight. This story is repeated across almost every portfolio. Whenever a state government fails to deliver, it points the finger at the federal government and asks for more money. The ability to divert responsibility to the federal government for many health and education outcomes is making state administrations rigid and unresponsive. Together with policing, these are core areas of clear constitutional responsibility for state governments, and they should rightly own both the successes and the failures. The fractured nature of the current federal system only makes Australians the losers, as it allows ever-cash-strapped state governments not to take responsibility for their failures.

Another perverse consequence is that revenue-starved state governments are forced to levy inefficient and destructive taxes simply to maintain adequate revenue. There is a broad consensus that payroll tax and other inefficient state taxes are punitive and economically destructive. Despite this, there is no genuine will or even fiscal ability to abolish them given how relatively impoverished state governments would be without them.

As a former accountant, tax reform is something I'm particularly passionate about and will continue to campaign for. I am not ideologically married to any approach to government; I am interested in efficient management and the delivery of essential services for all Australians. As a means of ending the duplication of responsibilities and service delivery, and also as a means of fiscal equalisation, I believe that the state and territory governments should take complete control of school education, with responsibility for health and tertiary education, including vocational training, to be transferred to the federal government. This is a clear delineation of responsibilities and represents the drawing of a line in the sand.

In order for a market to be competitive, it must have elasticity of choice. This is not the case with health. If I'm bitten by a snake in regional Queensland, I am not going to be calling hospitals interstate, waiting on the line, listening to 'Spanish Flea', looking for the cheapest price. I want to get to the nearest hospital as soon as possible. In the 2019 financial year, virtually all state government expenditure on education was on school based education. In the same financial year, the federal government provided approximately $20 billion in national partnership agreements to assist school funding for the states. To transfer responsibility for all school education to the state governments would be of substantial benefit for competition between states and for accountability. The federal government already administers Medicare, aged care, NDIS, private health insurance and the PBS, so why not directly administer all health services?

These changes in responsibility for the provision of health and education services would translate into an approximate net $45 billion in new liabilities for the federal government while at the same time delivering an equally large windfall to the states. This net windfall could be used to fund the abolition of payroll tax, an economically destructive tax which inhibits employment growth and business development. To help the federal government shortfall, it could make the sensible economic decision to reintroduce the small 1.5 per cent stamp duty on share trades. Even assuming a 20 per cent decrease in trade volume, this would raise around $20 billion a year. As a further bonus, this measure would act as a disincentive to high-frequency and short-term trading, which is for the most part highly speculative and little more than a manipulation of prices rather than investing in the traditional sense.

Australia must return to the principles of competitive federalism in areas where competition makes us stronger. Education is one area where our regional differences will make us stronger. States—more accurately, local communities—know more about their local school needs than an ideological bureaucrat sitting thousands of kilometres away in Canberra. Giving to the states complete responsibility for all school education will encourage greater accountability while ensuring that regional priorities are preserved.

Water and energy are two other areas in desperate need of reform. In particular, the responsibility for the provision of these services needs to be clarified. Originally, these were state government responsibilities, and it is my view that they should remain that way. The federal government can assist states in funding the critical infrastructure to provide these essential services via the creation of an infrastructure bank funded via infrastructure bonds. These reforms will see the federal government end up with an estimated $18 billion shortfall. A net windfall of approximately $18 billion will flow to the states and will, hopefully, provide the necessary incentive to get them on board.

Increased revenue from productivity gains and job growth boosted by the abolition of payroll tax, enhanced economies of scale in terms of medical inventory and greater public service efficiencies brought by removing eight state and territory health bureaucracies would give the government ample opportunity to recover its estimated $18 billion shortfall. Regardless of my personal views on where certain responsibilities should ultimately fall, I will continue to push for greater accountability and the reform of our federation. Without meaningful reform, governments at all levels and Australia's high standard of living will suffer.