Both the Commonwealth and the States have been experimenting in recent decades with regional planning and program administration. The emergence of a new suite of policy initiatives that place more emphasis on devolution, is perhaps a sign that subsidiarity is finally being recognised as important and that without it, real change in services on the ground may be difficult to achieve. These now extend to everything from natural resource management (e.g. see Bellamy this volume), to transport infrastructure. Indeed, if regional policies and programs were well designed and based on local consultation, they might go part way to deflecting some of the hostile views held by the regions towards the metropolitan centres.

However, it is instructive that neither the Federal nor the State governments have been able to ‘let go’ in relation to empowering regional areas to develop their own agendas. In other words, subsidiarity remains problematic and largely rhetorical even in regional policy. For the States, regional administrative offices and special regional entities (e.g. catchment management authorities) are part of the State apparatus even though they are required to have close connections with local and regional interests. The role of local governments in these state-led arrangements varies widely around Australia. To the extent there is some devolution, it is not necessarily to the next (lower) level of government. For the Commonwealth, new regional bodies have been established as an alternative to state-sponsored bodies, e.g. in policy areas such as economic development and natural resource management.

The Federal Government in recent decades has claimed credit for serious work on some regional-scale planning and development activities. Examples include the mapping of ‘regions’ under the Whitlam government (DURD 1973), diverse plans and forums for regional economic development, regional forestry agreements in the 1990s, the Natural Heritage Trust regions developed since 1997, and various social policy programs aimed at ‘place management’ in and for disadvantaged communities. Yet in all these examples the Commonwealth model is generally contractual, retaining regulatory and funding power, while strongly promoting the involvement of non-state actors at local and regional levels. There is also a risk that both state and federal programs with a ‘place’ or locational emphasis are open to unfortunate political pressures such as pork-barrelling. Another problem is that so many regional programs have limited time-frames, exacerbated by being subject to short budget cycles, lack of bi-partisan support, or lack of genuine federal-state cooperation. Initiatives are thus vulnerable to changes in direction owing to political conflict or ministerial changes. The challenge is to develop program design principles that are durable, supported by communities, and institutionally robust.

The current half-hearted attempts at regional policy and programs need to be made more genuinely cooperative and involve real devolution if they are to achieve ownership at lower levels. This would require both the Commonwealth and the States taking subsidiarity more seriously, although within agreed national policy frameworks. It is likely that our current system lacks the political incentives necessary for this to occur. The system currently tends to respond to power and conflict rather than new strategic thinking. Conflict and tension is built into the federal system. Differences are not always a bad thing in a dynamic evolving system. Indeed, the negotiation of different viewpoints can sometimes be a useful catalyst for innovation and progress. In a rigid power-based system, however, the conflict becomes either a passive symbolic ritual or else becomes a polemical exercise in blame-shifting and confrontation (worse if complicated by party political differences). Under these conditions, conflict is not a creative force for developing better solutions.

The system thus needs specific machinery to encourage genuine negotiation and to facilitate innovation and excellence. Cooperative federalism, despite its legal and constitutional complexities (Saunders 2002), is the way forward on most large policy issues. The question becomes, how can efforts towards cooperative federalism – which tend to focus on relations between federal and state governments, and even then have a problematic history – be extended to pursue more genuine devolutionary models at the local and regional levels.