4. Splicing the perspectives of the Commonwealth and states into a workable federation^[1]

In my view, we are on the verge of a revived federalism, which holds great possibilities for Australia in the twenty-first century. By this I do not mean we are about to eliminate or radically diminish the power of the states or any other critical element of the institutions of the federal system. Rather, we are on the threshold of entering into a new compact between governments, which contains the potential to confer several benefits on the Australian people:

Having been in public administration at the Commonwealth and state level, I can say that talent and creativity are to be found at both levels of government. We can harness these strengths to deliver enhanced economic and social outcomes for Australia.

So I don’t intend to propose a radical solution, of either diminishing or substantially enlarging the powers of one or another constitutional actor.

Of course, the lawyers among you might first think of constitutional reform as the key to transforming Commonwealth–state relations for the better. That is certainly a conversation worth having.

As the Special Minister of State remarked in his speech for Constitution Day celebrations in July 2008, there was a strong case for updating what he described as the ‘stump-jump plough’ of constitutions.

However, I can only agree with Senator Faulkner’s judgment that Australians on the whole are a sceptical lot who must be thoroughly convinced that any proposed changes will deliver practical and necessary improvements on the current system.

Where constitutional reform is concerned, that has always been a tough job. A number of ideas were put forward at the 2020 Summit for potential constitutional reform. The government is currently considering these proposals.

However, for those of us who deal in public policy, it is clear we have made enormous progress even without any fundamental change in the institutions to which the constitution gives rise.

We as Australians demand a great deal of ourselves and our governments. This has led to the continuous pursuit of practical but necessary improvements within the parameters of the current arrangements. And when challenges have arisen, we have worked constructively to find a way through.

The cooperative forces that forged the federation compact in the first place have continued to ensure that our country works. As greater fiscal power has moved to the Commonwealth, community attitudes have also changed.

Now there is broader acceptance of the Commonwealth taking an interest in a larger array of domestic government activity. But this is not to say the community wants outright Commonwealth control.

We have all come a considerable distance—but this is not to diminish the challenge still before us.

So in considering the future of Australian federalism, I would like first to discuss some recent research, the core challenges for the future and then turn to the ambitious program of reform that COAG currently has before it.