Altered states

The success of Labor at state-government level is often remarked upon, and as something more than voters playing it safe by having governments of different stamp at different levels of politics. It is worth contemplating the converse proposition—the dismal failures of conservative coalitions at state level while John Howard’s star has increased, and his own revolutionary shifts in the federal compact.

John Howard has ever been a centralist, even in the Fraser years. He is a political realist, and has at times—in government as an excuse or in opposition as a tactic—accepted the old nature of the compact and its notions of reservation of powers to the states. But he increasingly sees the old division as a significant brake on Australia’s capacity to develop as a market economy.

Teasing him while in political exile about 15 years ago—at a time when it seemed unlikely that he would return to any sort of political leadership—I commented that Deo volente I would probably still be on the game when he died. What would he want me to say in the obituary, I asked. His answer was immediately that he was a centralist and had never adopted any reverence towards the divide.

I must confess a little astonishment, given his background. He first became closely involved in politics during the 1960s, in the NSW machine, and was an observer, if not a participant, in the developing antagonisms by that branch (and Victorian branches) against John Gorton, particularly over Gorton’s centralist tendencies. There were a host of reasons, including Gorton himself, why Gorton fell. The primary reason was the antipathy of the NSW Premier, Robin Askin, and Victoria’s Premier, Henry Bolte, over federal-state finances and increasing commonwealth reach into areas that the states regarded as their own. Gorton’s successor, Billy MacMahon, for whom Howard briefly worked, paid appropriate obeisance to the federal compact. After all, the raging centralism of the Whitlam government in almost all areas was one of the wickednesses to which Liberals would point. It seemed to become accepted wisdom that Labor was centralist, and given its druthers would abolish the states as well as the Senate, while the conservatives saw in the federal division of powers an essential check on the unbridled ambitions of socialists.

There is one respect in which John Howard has helped the states as Prime Minister, even if he is now making it clear that this also gives him power he might not hesitate to use. Howard gave the states goods-and-services tax revenue, in theory to spend as they liked. That suited him in selling the idea of broader-based consumption taxes, and helped the states out of a hole as old state excises were found to be unconstitutional. It also allowed him to demolish an increasingly complicated panoply of financial assistance grants given under Section 96 of the Constitution for particular purposes (‘FAGs with tags’, as some called them) and to make the states more fiscally accountable.

What is now clear, however, is that Howard actually means to take this accountability further. It is not simply a matter of insisting that states honour their promises of progressively removing or reducing taxes, and of using his residual powers over continuing FAGs with tags to make it happen. He is demanding that states spend other money—for example, the so-called competition payments—in the way he wants, particularly over water reform. He wants more evidence of outputs and results, not mere accountants’ acquittals, of commonwealth grants to the states in areas such as education, housing and Aboriginal affairs. He is making more of the extra grant process in areas such as health and education, conditional on premiers agreeing to adopt commonwealth agendas in teacher education, civics, flag-waving and national standards. In state areas such as roads, the Commonwealth now spends significant money without more than casual reference to the states. Quite apart from the pork-barrelling and logrolling (and corrupting) aspects of discretionary commonwealth political treasure chests, is the way in which many of the schemes impinge on traditional state responsibilities.

Meanwhile questions of complete commonwealth takeover of industrial relations, public hospitals, universities, and perhaps the funding of non-government schools, are raised, with significant commonwealth task forces investigating just what would be involved were the Commonwealth to force its way in and freeze the states out. John Howard may encourage talk of such takeovers without necessarily meaning to, but it serves a key political purpose of reminding voters just how badly the states are running such areas, and of responding to state attempts to blame the Commonwealth for all imperfections. It also reflects a view that these are areas of national importance, with less justification for eight separate, slightly different, regimes. If one puts together the rhetoric, rationales and threats of ministers in various areas of these targets, it is clear that Howard is prepared to use all of the constitutional powers at his disposal—including the external affairs power—to force the changes he wants.

The cynic might note that impatience with federalism extends to the federal structure of his party, which has often embarrassed him. Howard sheds few tears for the defeat of his internal party enemies in states such as Western Australia or even, sometimes, in NSW. The realist in him knows that an era of state Labor governments is probably moving towards an end. If fairly lacklustre conservative state governments take their place, it will be in political environments quite different from those in which warlords such as Askin or Bolte ruled. The states will be more akin to provinces in Canada, creatures of the federal will. Though, no doubt, another part of Howard the cynic believes that power accumulates where power is. So long as he’s in Canberra, that’s where it will be. If he’s not, well, who cares?       

Jack Waterford is editor-in-chief of The Canberra Times.



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