“Federalism is not seen as a key issue at this election. It should be,” Tim Colebatch has written in The Age this week. “Almost the entire election campaign has been fought out on state government turf. Schools are run by the states. So are hospitals. So are roads.

He’s harked back to the premiers’ conference in Brisbane in 1990 and the birth of COAG – and “a background briefing on this huge reform agenda by [Wayne] Goss’s sherpa, a young blond guy in specs, crisp and competent… This was Kevin Rudd.”

Seventeen years later, Colebatch says, Rudd has the opportunity to lead a second, even more important, wave of reform. But will he?

Crikey understands that the former head of Prime Minister & Cabinet, Michael Keating, has a big report on the subject ready for Rudd when he gets in. Publicly, though, federalism is being ignored by both sides of politics in this campaign.

True, there’s the odd bit of talk about Canberra taking over hospitals or schools, but has anyone thought these through? These are the people who run the Immigration Department, after all. The people who have stuffed our universities.

States have been robbed by Canberra of the tax base that would enable them to meet the huge growth in school participation, the ageing of the population that pushes up health care costs, the demand for transport and utilities infrastructure – as people like Rory Robertson have documented.

The federal government shouldn’t try to take over services. It should fix these revenue issues so that schools and hospitals and other services can be properly funded and run by jurisdictions that can be properly responsible electorally accountable for their provision – state and local government.

The blame game will exist as long as there is someone else around to point the finger at – as long as responsibilities are shared.

The answer doesn’t lie in “cooperative federalism”. PM Rudd will soon discover that the Commonwealth and the states have differing interests.

The answer was identified back when COAG begun. It’s simple – but it also requires massive political will.

It’s fixing vertical fiscal balance.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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