Last year, Australia’s state premiers, being all from the same political party, decided to pursue closer co-operation between themselves in their dealings with the federal government. They formalised their relationship under the title of “Council for the Australian Federation“.

Yesterday the Council released its first report, Australia’s Federal Future, written by Anne Twomey and Glenn Withers. It tells us that federalism is a good thing.

It’s not surprising that a report for state premiers would endorse federalism, but Twomey and Withers have produced some interesting statistics. They estimate the benefits of federalism as a 10.5% increase in GDP, or $4,507 per head in 2006, and say that almost as much again could be realised by further loosening central control of state finances.

The report acknowledges the costs of “conflict, buck-passing and blame shifting between governments”, but Professor Withers points out that “These costs, which annoy us so much, are relatively small compared to the advantages of flexibility, localisation, innovation and competition”.

None of this should come as a shock. The most cursory look at overseas experience suggests that the relationship between federalism and economic success is certainly not negative, and the trend in formerly centralised countries such as Spain and France (and to some extent the UK) is clearly towards federalism.

Traditionally, federalism or “states’ rights” in Australia has been a right-wing cause, and those on the left often supported increased federal power to overcome the backwardness of reactionary and undemocratic state governments. The relevance of those positions has disappeared, but the anti-federalist cause still manages to market itself as progressive, democratic and pro-efficiency.

Anti-federalism today seems to be a weird alliance of unreconstructed leftists, business types who are impatient of checks and balances (even though in the long run they add to prosperity), and crusaders against government waste who are well-motivated but, as Twomey and Withers argue, looking in the wrong place.

It would be nice to think that Australia’s most centralist prime minister, John Howard, had turned the left into defenders of federalism.

So far, however, there are no signs of that from Kevin Rudd’s ALP.