LAST WEEK FORMER Tasmanian Premier Robin Gray, while commenting on ABC Radio’s Tim Cox show about the current dry spell, the level of Hydro water storages, and the Gordon-below-Franklin power scheme, made the interesting observation that our current federal system may cease to exist in 50 years or so.
This is, in part, what Gray had to say on Cox’s show:
“I think from the point of view of the legal position of the states vis a vis the Commonwealth it was the wrong decision. They rewrote the Constitution by a High Court decision, and it was a narrow decision. And of course the former Labor Attorney-General Senator Murphy was then sitting on the High Court and one has to wonder whether that influenced his vote. I think it was the wrong decision, but that’s history and as I say, events have now proven that the Commonwealth have assumed powers over nearly all areas of Government where they want to use it …
… I think I won’t live long enough, but I would say that in 50 years’ time the states will have even less powers, in fact we might see a totally different Australia as we know it. I don’t think that’s a good thing, because I think little states like Tasmania will just be trodden all over as we have been in the past over the Franklin dam, over the Wesley Vale pulp mill by Canberra. I think that will be a tragedy, but I think the writing is on the wall and it’s coming. John Howard who is supposed to be a federalist is making it pretty clear he’s more a centralist than a federalist. And I think we will see even more changes. There were threats to take over the ports system a few months ago. Just another threat, just another one waved around like a kite flying, but you’ll see in time they’ll probably move to assume more power in that area and many other areas. Education, health as well. And that, I think is wrong”.
I agree entirely, but think he is being a bit generous about the 50 years. If the rapid erosion of States’ rights continues at the same rate that we have seen over the past 20-25 years, the States will cease to exist within the next two to three decades. If they survive, it will be in name only.
Another key example of the Commonwealth encroaching on traditional areas of state responsibility is in relation to industrial relations. The proposed industrial relations law changes will strip the states of their own powers and industrial relations systems.
Without entering into the pros and cons of the forestry debate, Tasmania lost the sole power to manage its native forests years ago.
But, the two biggest threats to the States are the introduction of the GST and the changed role of the Senate.
More than half a century ago the High Court stripped the States of the power to raise income taxes by declaring that this was the prerogative of the Commonwealth. The States were then forced to rely on the annual Premiers’ Conference split up of a pool of funds taken from these taxes, supplemented by a range of largely regressive state taxes. As the Commonwealth dictated more and more on what services and programs these funds were to be spent, the states relied more and more on their own tax base to retain some control over spending priorities.
Surrender state-based taxes
When the Howard Government introduced the GST and promised that all of it would go to the States, the States were pleased (overjoyed?) that they would have access to a growing tax pool which would take some of the angst out of the annual negotiations with the Commonwealth and provide some budget certainty. However, the trade-off was that they had to surrender a lot of state-based taxes. These taxes, in the main, were regressive and a deterrent to economic and employment growth but they had one great advantage — they gave the states a greater degree of autonomy. There are safeguards in the legislation to stop the Commonwealth exceeding its powers — for example the GST rate cannot be raised without the agreement of all the states.
That looks all safe and tidy when the Government of the day doesn’t control the Senate. But now that it does it can change that legislation at any time and we are now seeing the Federal Government flex its muscles by insisting on the removal of further state taxes (it says this was part of the original agreement; the states have a different interpretation) and that the states agree to Commonwealth policy programs in areas like, as Robin Gray noted, hospitals, education, ports, university funding and so on.
As mentioned earlier, I believe that the other major factor undermining the power of the states is the changed role of the Senate. Under our Constitution each of the States were given the same number of seats in the Senate. This was to protect the less populace states against the power of the bigger states.
Our Senators (originally 10 and now 12) were supposed to vote in favour of their own state’s interests. Except in rare circumstances (Harradine for example) this no longer happens. The Senators from the major parties mostly vote along party lines. Since the demise of Harradine and the decline of the Democrats the small parties and independents in the Senate are mostly issues-based. The Greens, for example, have predominantly an environmental agenda and use their votes accordingly.
So, in summary, several High Court rulings on taxes and the Commonwealth’s corporations powers, the GST and the demise of the Senate as a states’ house means that almost all of the checks and balances to protect the rights of the states have either gone or been eroded. For these reasons I agree with Robin Gray that the States have a very bleak future.
It is a subject that really should be the focus of much more national debate. It is far more important, for example, that the question of whether Australia should become a republic.
For nearly 20 years Michael Lester was a political journalist and commentator with the three local newspapers, The Mercury, The Examiner and the Advocate, and with ABC Radio. He also worked as political adviser to the late Premier Jim Bacon and now runs the Tasmanian office of CPR Communications & Public Relations Pty Ltd.
