Reforming Australia's Federal System

DOI10.22145/flr.36.1.3
Published date01 March 2008
Date01 March 2008
Subject MatterArticle
REFORMING AUSTRALIA'S FEDERAL SYSTEM
Anne Twomey
INTRODUCTION
On 9 February 2007, all State Premiers, in the Council for the Australian Federation,
agreed that a constitutional convention should be held in 2008 to propose reforms to
Australia's federal system.1 The need for a Constitutional Convention to improve the
operation of the federal system has been supported by a broad coalition, ranging from
business groups,2 to local government,3 academics4 and the media.5 Bob McMullan, in
his former role as Shadow Minister for Federal/State Relations, stated that the idea
was 'worthy of serious consideration'.6 The 2020 Summit, held in April 2008, also
proposed the holding of a constitutional convention to reconsider the allocation of
powers and functions across all tiers of government and the finances needed to fund
them.
There appears to be a growing recognition that the current system of creeping
centralism is dysfunctional and that it would be to the benefit of all Australians if our
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Associate Professor in Law, University of Sydney.
1 Council for the Australian Federation, Communiqué, 9 February 2007. Consideration of a
constitutional convention has since been deferred, due to the change in Commonwealth
Government, until other election promises concerning Commonwealth-State co-operation
have been met.
2 Business Council of Australia, Reshaping Australia's Federation — A New Contract fo r Federal-
State Relations (2006) 24; Michael Chaney, 'Act Together or Kiss the Federation Goodbye',
The Australian Financial Review (Sydney), 22 November 2006, 59; NSW Business Chamber,
2007 Australian Business Priorities: Fixing the Federation (September 2007).
3 'Local Government Association of Queensland, 'Councils Support Call for Constitutional
Convention' (Press Release, 2006).
4 Andrew Lynch, 'The Die is Cast and it is Time to Reshape Australian Federalism', The
Sydney Morning Herald (Sydney), 15 November 2006, 13; George Williams, 'Expensive Way
to Run a Country', The Australian (Sydney), 8 December 2006, 14; Dean Jaensch, 'Time to
Rewrite the Constitution — Just Keep MPs Out', The Advertiser (Adelaide), 18 April 2007,
20.
5 Steve Burrell, 'It's Time to Rethink the Economics of Federation', The Sydney Mo rning Herald
(Sydney), 22 February 2007, 20; Editorial, 'States of Disarray: it's Time to Fix the
Federation', The Sydney Morning Herald (Sydney), 10–11 March 2007, 36.
6 Bob McMullan, 'After the War with the States is Over: Reform in a Post-Howard Era',
(Speech delivered to CEDA, 6 September 2007).
58 Federal Law Review Volume 36
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federal system operated more effectively.7 With the election of the Rudd Government
and a period of at least a year in which no State or federal elections are likely to occur,
there is an historic opportunity to achieve substantial federalism reform.
The most common complaints about federalism concern duplication, excessive
bureaucracy and administration, buck-passing and cost-shifting. The most common
suggestions for reform include the reallocation of powers and functions between the
Commonwealth and the States, the reform of Commonwealth-State financial relations
and the improvement of intergovernmental processes.
This article considers the matters that a constitutional convention would be likely to
address in proposing reforms to our constitutional system. It discusses both
constitutional and non-constitutional reforms, and in doing so draws upon the
experience of other federations.8
THE ALLOCATION OF POWERS AND RESPONSIBILITIES WITHIN A
FEDERATION
Federal systems of government have many advantages over unitary systems. They
provide greater choice and diversity, they allow the customisation of policies and laws
to meet local needs and differences, and they support competition and innovation,
leading potentially to more economically efficient governments.9 However, the
benefits of choice and competition must be balanced against the benefits that arise in
some cases from uniformity or the economies of scale that may result from one level of
government performing a particular function. It is therefore important that the
allocation of powers and responsibilities between the levels of government be kept
under review and that a level of flexibility is maintained to ensure that the federal
system operates most effectively.
Centralising power at the Commonwealth level is not the only way of achieving a
degree of uniformity in those subject areas where it is desirable. Indeed, complete
uniformity may not always be necessary or in the best interests of the country. In some
cases the declaration of minimum national standards might be appropriate, leaving
each State the option of building on those standards or implementing them in different
ways. In other cases uniformity might be desirable in relation to some aspects of a
subject matter, while others are best left to be adjusted to take into account local
differences.
There are several different ways of managing the allocation of powers and
responsibilities in a federation in a manner that maintains the appropriate balance
between uniformity and diversity. In Australia, these include:
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7 Matt Wade, 'States' Self-Interest Could Stymie Rudd's Reform Plans', The Sydney Morning
Herald (Sydney), 26 November 2007, 3.
8 Due to the difficulty in obtaining up to date English translations of some foreign
Constitutions, some provisions referred to in this article may no longer be current.
However, they remain useful examples.
9 For a discussion of the economic and social benefits of federalism, see Anne Twomey and
Glen Withers, 'Australia's Federal Future', (Federalist Paper No 1, Council for the
Australian Federation, April 2007). See also Jonathan Pincus, 'Six Myths of Federal-State
Financial Relations' (CEDA, Economic and Political Overview 2008, February 2008), with
regard to the economic advantages of federalism.

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