It is true that, if the Australian people were confronted with a ‘greenfields’ choice between alternative paper plans for good government, they might choose a more simplified structure than the current complex three-tier model. The attitudinal research set out by Gray and Brown (this volume) certainly tends this way. However, the two-tier option, despite its apparent simplicity and rationality, is ultimately impractical for the foreseeable future. The business case for moving rapidly towards two-tier federalism, with the current array of states displaced or absorbed in various ways, remains rhetorical and impractical; especially the radical version of constitutional change to abolish the States. It is therefore more productive to apply our imagination and political goodwill towards addressing the apparently high level of public interest in federalism reform, by making our system work a lot better.

This should not be seen as a defence of archaic ‘States’ rights’, a rhetoric whose time has truly passed. Rather, this is an opportunity for existing state jurisdictions to recognise they can play an important role in purposeful reform of policy and administrative arrangements – even if this means being prepared to share power with local and regional bodies in more serious and durable ways than previously achieved, or indeed previously tried.

Instead of their historical preoccupation with resisting the Commonwealth, the state governments should focus their attention on program areas that deserve to be organised at a state level (i.e. on the spatial scale between national and local). They should divest themselves of matters that can better be handled federally, regionally or locally. Areas that are directly concerned with national economic regulation should be ceded to the federal level. Some matters that the States largely control should be devolved, with appropriate authority and funding, to lower levels for planning and action. Matters for such consideration might include urban and regional development, and improved service integration for residents of provincial and rural areas. The state level could assist by ensuring good governance, equitable treatment of local areas, and support to address skills shortages.

Insofar as structural changes to improve the federation deserve further consideration, more research and policy development is needed on options, transitional arrangements, and the testing of public support for various objectives and institutional options. In the meantime, three-tier federalism should be improved by innovative attempts to deliver better services through a combination of national agreements, clear responsibilities for service arrangements, and a more robust approach to regional-level policy and programs that involves genuine devolution. This would require both the Commonwealth and the States taking subsidiarity more seriously, within agreed national policy frameworks. The States need to take this opportunity to rethink their core business (what works best at state level?) and support both sensible devolution and national frameworks. Half-hearted attempts at regional policy and programs (by both the Federal Government and the States) need to be made more genuinely cooperative, and involve genuine devolution.