Table of Contents
This chapter focuses on the issues and challenges for State governments in reforming Australian federalism. It proposes the more effective use of subsidiarity principles as a benchmark for assessing various reform proposals recently put forward from a range of perspectives. It examines some of the possible roles of state governments within an evolving federal system that has recently been characterised by a series of national agreements on major policy issues. The various proposals for fundamental redesign of the federation, including abolition of the States, are rejected. An argument is made in favour of a practical focus on effective and responsive governance, including a closer focus on more effective regional service delivery. This practical approach to ‘good governance’ would thus require continuing along the path of negotiating national agreements, taking subsidiarity more seriously, further clarifying roles in improved service delivery, and allowing greater flexibility and capacity for innovation at the sub-national levels. Having seriously embraced this path, more research needs to be done on the institutional arrangements that would most effectively sustain it in the long term.
As a prelude to analysing preferred solutions, we need to understand the nature of the problems with the Australian federal system as it has operated over recent decades. Concerns about the ‘crisis of federalism’ are raised in different ways by each generation (e.g. Greenwood 1946, Patience and Scott 1983). These are variously identified as problems with structures, problems with revenue-raising, problems with the allocation of powers, problems with coordination, problems with relational or political processes, problems with poor outcomes/performance in certain areas, or all of the above. The pressures for change come from many sources – some come indirectly through external and systemic pressures such as the global economy, and other sources of change are closer to home, such as political disputes over directions in important areas of policy. The federal system, at any given time, reflects its complex history. It offers a range of constraints, opportunities and incentives for the actors at three levels of government, and also for those major business and community groups that seek to influence policy arrangements. The variable identification of problems naturally gives rise to different prescriptions for change.
It is important to understand that there are widely divergent views about what needs to be fixed in relation to the current three-tiered federal system. Among the many sources of criticism, it is useful to note five sectoral perspectives: local government, state government, the national government, business lobbies, and the larger non-government organisations (NGOs). The alleged deficiencies and preferred solutions are defined in different ways.