Left-Right slogan drowns out debate on federalism

The National Commission of Audit has certainly proved you can’t please all of the people all of the time. Reaction has been more polarised than it might have been if more people had read the report itself rather than early angry comments on the report — but, given the size of it, perhaps that’s understandable.

It’s in the nature of any report this comprehensive to be misunderstood by detractors and supporters, but this is too important a review for public debate to be allowed to descend into lazy politicking. Whether or not one agrees there is a crisis, there is a long- term structural gap opening up between the amount of money government collects and the amount of money it spends. Equally significantly, the audit is a chance to talk about who deserves help and how we can pay for it.

For many on the Left the report has triggered a fresh wave of the usual “save the ABC” and “support public education” protests. The Left seems to have missed the commission’s recommendation to cut back paid parental leave to expand affordable childcare. For many on the Right, the review has been a welcome tool with which to hit the welfare rights lobby while ignoring the chairman’s statement that while a recommendation would have been out of scope, Newstart was currently too low. Somewhere in the middle of this outbreak of Left and Right confirmation bias, a conversation is being missed about hundreds of challenges we need to address.

Crikey’s Bernard Keane made an observation on day one of the debate that the federalism aspect of the audit’s recommendations was a genuinely new contribution. While much of the report can be broadly put into the “do less” and “do it cheaper baskets”, the audit’s proposal to return responsibilities to the states is much more radical and deserves much more discussion.

Restoring the states to their proper constitutional role after years of commonwealth encroachment would be fiscally sound as it solves the key problem of recent years — that the commonwealth collects the bulk of the money while the states are responsible for delivering the bulk of the services.

The interminable blame-shifting over health reflects this problem, about which the commission has said: “Complex funding arrangements between the commonwealth and the states are in place for public hospitals, resulting in a lack of clarity when it comes to political responsibility and accountability.” The second thing a reinvigoration of federalism would do is arguably even more important — restoring accountability to political custodians of public services. Constitutional experts talk about subsidiarity and devolution, which basically means the jobs of government should be allocated to the lowest possible level of government. This means the work government does on our behalf and with our money is undertaken as near as practicable to the people to whom government is accountable. It also lets people compare how all the states are doing, to hold their own state government to account. The commission allows historian Geoffrey Blainey to sum up the benefit of a federated system succinctly: “It is highly democratic. It is a guardian of civil liberties, because it offers a balance of powers rather than one supreme power.” The commonwealth parliament is a bubble inside a beltway at the top of an ivory tower. The people who make decisions there are far removed geographically, demographically and intellectually from the people for whom they make decisions.

Canberra politicians generally believe their state colleagues are lesser creatures. Many have a thinly veiled contempt for provincial politics. Canberra, however, has the bigger salaries as well as the easier jobs. With all the taxes and few of the service level obligations, Canberra politicians and bureaucrats can force the states to sign up to any agreement they please. Paul Keating’s famous line about never getting between a premier and a bucket of money has been widely interpreted as revealing the greediness of state leaders; the truth is it reveals only the hunger manufactured by “vertical fiscal inequity” — or, in plain terms, federal taxation starvation.

The audit commission has recommended a structural solution to this problem. Give the states clear control and responsibility for state services. Give them an income to do their job. And replace the self-serving judgments of Canberra with the democratic review of the states’ voting citizens. This issue is not about Right and Left, Liberal and Labor, or the rich and poor. These proposals are about restoring accountability to government itself, no matter who is in charge.

Cassandra Wilkinson works at The Centre for Independent Studies.