The first of five facts crucial to understanding the extent of the challenges faced by Australia’s current federal system, is the unusually centralised nature of that system by comparison to most federations. Indeed Australian federalism is probably more centralised in its politics, finances and operations than many unitary, non-federal systems of government. This fact is important because it is often assumed that since federations tend, by their structure, to be more decentralised than unitary states, the decentralist benefits of being a federation necessarily flow in fair measure to Australian citizens (e.g. Saunders 2001: 130; Galligan 1995: 253; Twomey and Withers 2007: 6-7). While Australia can be safely presumed to be less centralised in its political structure with six states than if it had none, this does not mean that it is not highly centralised – and not only in the degree of national government control, described at the outset, but in the degree of political centralisation that also exists at state level.

In fact, seen in its totality, the history of Australian constitutional development makes the nation uniquely centralised. The historical weakness of local government, the size of most states in either population or geography (or both), and the history of large-scale state intervention and public bureaucracy at state level are all distinctive features of the Australian experience. One indicator of the stark contrast with other federations is provided in Figure 2.2, which shows the share of public expenditure that falls within the control of local government in Australia, by comparison with five other federations. This figure does not simply demonstrate the impoverished state of Australian local government by comparison with other countries, as further described later in this book by Paul Bell. It also demonstrates graphically that many of the functions and responsibilities undertaken by state governments in Australia – including many elements of education, policing, health and other social services – in most other federations would be controlled from a more localised level. In seeking explanations for why public dissatisfaction with state-administered services appears relatively high (see Gray and Brown this volume), and why so many political opportunities seem to exist for federal governments to intervene to correct or redirect state government policies, it behoves us to consider whether, structurally, it makes sense for so many areas of policy and service delivery to be controlled from the level of state governments.

Source: International Monetary Fund Government Finance Statistics Yearbook (2002).

This situation also demonstrates graphically that all levels of government need to be considered if reform of Australian federalism is to be justified on the grounds of achieving greater ‘subsidiarity’. Subsidiarity is the policy principle that government functions and services should be administered at the lowest level of government that can feasibly exercise that function, ‘to the maximum extent possible consistent with the national interest’ (Australian Premiers and Chief Ministers 1991, quoted in Galligan 1995: 205; Wilkins 1995; Twomey and Withers 2007: 28). In 1991 it was adopted by Australian governments as one of four key ‘pillars’ of modern intergovernmental relations – but chiefly in support of arguments against continued drift of responsibility upwards from the States to the Commonwealth, and/or return of responsibilities downwards from the Commonwealth to the States, rather than dealing with the at least equally important issue of governance deficits at the local and regional level (Brown 2002). How subsidiarity might be taken more seriously, is a key question throughout this book (see Podger, Head, Wiltshire and Smith, this volume).

A second, related fact is that our federal system has been historically dependent on institutions with weak – or indirect – political legitimacy. In other words, we have relied heavily on experts, officials and participating interest groups to help generate policy solutions, or direct services, rather than relying on elected officials to take direct responsibility for how programs are run. This is in part a corollary of the legacy of weak local government and large centralised state governments. While Australia has more legislators per capita than many countries, if local government representatives are included in the equation Australians actually have far less elected politicians working for them than the citizens of most countries (Brown and Drummond 2001; see also Twomey and Withers 2007: 20).

To respond to the diverse needs of large territories, state governments have instead responded to (and helped perpetuate) the weakness of local governance through the extension of large government departments, bureaucracies, commissions and statutory authorities, quasi-non-government organisations and, more recently, the engagement of non-government organisations and not-for-profit organisations in service delivery. From the time of its own first forays into regional policy, the Commonwealth Government has followed a similar pattern, with ‘the prejudices and ambitions of individual officials and ministers’ tending to be ‘more influential than any general doctrine regarding the appropriate roles of central and provincial government authorities’ (Walker 1947: 4-5, 89). While this experience resulted in strong public service traditions, it reduced popular expectation that elected officials should even be in place, let alone have the capacities, to take direct responsibility for the delivery of many services. Arguably, this state of affairs may have increased popular cynicism about the worth of those legislators we do have, relatively removed as they often are from the coalface of the programs for which they are notionally responsible. In any event, for most of the last 150 years we have tended to rely on large specialist bureaucracies more than general-purpose local, provincial or ‘regional’ government.

While we have had many decades to become inured to a system of governance based on these first two facts, a third fact is that Australian federalism would be quite different, institutionally, if many of our own federal founders’ beliefs about the structure of the Federation had come to pass. Among the various provisions that allow for adaptation and change in the federal system, the founders of the 1890s included express provisions in Chapter VI of the Constitution contemplating structural or territorial change – in particular, decentralisation of the colonial-era structures through further territorial subdivision and the admission of new states. It is not often realised that federation coincided with a revival of the principle that the British colonies should be divided into a greater number, a process commenced but, according to many, not finished by the separation of the various existing colonies from New South Wales between 1825 and 1859.

In particular, with adoption of an American basis for the Australian Constitution in 1889-1890 came a rekindled awareness of the way in which the United States had grown in number, following their union a century earlier. This growth had taken place not only through subdivision of the Southern and Eastern territories acquired after federation, but reapportionment of the territory held (or claimed) by many of the original states themselves, between 1776 and 1861. Figure 2.3 sets out this aspect of American history, now dimly remembered, but better appreciated by Australia’s federal founders. Just as Benjamin Franklin had predicted that federalism could work as a ‘commonwealth for increase’ through the subdivision of large territories within a federal union (1754; see Beer 1993: 155-8, 354-5), so too Henry Parkes adopted the rhetoric of an American-style commonwealth that would be ‘great and growing’ (Parkes 1890: 4, 28, 169; see also Parkes 1892: 603-10). It is no accident that in this book, both Mal Peters and Ken Wiltshire make further reference to Parkes.

Source: Brown (2003: 151)

Here is not the place to recite the little known history of the new state provisions in Australia, their importance in securing popular support for federation particularly in Queensland and Western Australia, or the reasons why various movements for new states from the 1920s to the 1960s failed. Suffice to say, the provisions were not included simply through blind copying or accident. Similarly, whether successful or otherwise, the existence of such movements provides a tangible demonstration of political regionalism in Australia, at times commanding the support of a majority of the population in major regions, and again reinforcing the poor alignment between the ‘state-regionalism’ inherited at federation and regionalism as its exists in real political culture. It is striking that analysts of federalism still recall those expressions of regionalism which did succeed in gaining territorial self-government, such as the 18^th century campaign for the separation of Victoria from New South Wales (see e.g. Twomey and Withers 2007: 18) – but fail to remember the identical but unsuccessful movements that followed, or acknowledge the challenge present for the notion that ‘state-regionalism’ adequately reflects Australia’s major subnational political identities.

A fourth fact worth noting, is that Australian federalism would also be institutionally different today, if the 20^th century had seen the development of a more effective deliberative culture on constitutional questions – and in particular, a better party-political culture of constitutional bipartisanship. Without examining the technical flaws inherent in the Constitution’s new state provisions, or whether the favoured solutions to these would have ever worked, it is important to recall that both major formal constitutional reviews of the 20^th century did achieve a bipartisan consensus that the provisions should be adjusted so as to make it easier for new regions to be recognised and admitted to the federation. The first of these, the Peden Royal Commission on the Constitution (1927-1929) recommended unanimously to this effect, even as it voted only narrowly – by four members to three – to retain a federal system rather than abolish it in favour of a unitary one. A similar recommendation was reached by the federal parliamentary constitutional review committee of 1958, notwithstanding that at the time, the Labor members of that committee subscribed to a party platform which advocated total abolition of the States.

This curious history has its value as a reminder of past lost opportunities for better discussing and diagnosing the basis of widespread popular, expert and political criticism of the federal system. Not only have varying levels of popular disaffection with the spatial structure of federalism always been with us, but we have not been very proficient at realising when the different solutions being proposed by different groups, in fact relate to similar if not identical problems. For example, defenders of federalism tend to remember that new state advocates were explicitly pro-federal in principle, being pro-decentralisation, but not that they also advocated significant enlargement of federal power to deal with national issues (see e.g. Page 1917; 1963: 45). Instead, we prefer to associate pro-centralisation sentiments with the Labor or social-democratic interests that have made the most direct attacks on federalism in principle (see Galligan 1995: 91ff, 122) – ignoring the fact that most 20^th century proposals for conversion to a unitary system closely resembled new state movements, in their embodiment of constitutional formulae for the structural devolution of power to ‘regional’ provincial governments (e.g. Figure 2.4; see Brown 2006).

Source: Ellis (1933)

In recent years, a greater ability to look beyond party-political stereotypes and short-term political gains has been identified as an important need in all debates on constitutional development (e.g. Saunders 2000). This need clearly applies to questions concerning the relationship between regionalism and federalism under the present Constitution.

A fifth fact, as asserted at the outset of this chapter, is that the Australian federal system remains dynamic as we move forward into the 21^st century, notwithstanding the gridlock affecting these past 19^th and 20^th century efforts to better accommodate regionalism within the national constitutional settlement. Notwithstanding the lack of productive outcome from these debates, there has been enormous past and current change in the dynamics of Australian federalism, including with respect to regionalism. In almost every aspect, the federation we have today is vastly different from the federation of 1901 or 1910. The growth in federal influence and financial control has been phenomenal, particularly in the recent period of ‘pragmatic federalism’ (Hollander and Patapan 2007), also described as ‘regulatory federalism’ (Parkin and Anderson 2007) or, less generously, ‘opportunistic federalism’ (Twomey and Withers 2007). While some people decry this trend, in other respects it has been clearly advantageous to national social and economic development, and holds further potential for nationally-coordinated approaches to improved policy making, service delivery and institutional restructuring at all levels of the system. When it comes to the quest for a more effective, responsive and efficient system overall, three examples will suffice: