Sometimes the difference between our Federal and State leaders is thrown into stark contrast.

Yesterday the Prime Minister flew back from the US, diverted his plane to Brisbane to look at the storm damage, called a press conference at 6.15am, then came to Canberra to spend the day with several hundred local mayors where he spoke twice and sat in on some workshops, then flew to Sydney to present the Ethnic Business Awards last night and then is back in Canberra today to speak at the War Memorial about HMAS Sydney. There is no doubting the man’s quite frightening work ethic, or for that matter his carbon footprint, which must resemble that of a small African state.

The main order of business yesterday was doling out money for immediate expenditure by local governments. The Opposition has suggested — not incorrectly — that there might have been greater emphasis on improved local governments’ financial accountability, but Scott Morrison this morning sensibly distinguished between the point of the exercise — economic stimulus — and what he hoped would be a longer term goal of greater transparency and accountability.

That is evidently the Federal Government’s goal too. The Prime Minister yesterday made clear further funding beyond the current $300m will be contingent on financial accountability improvements. The Australian Local Government Council, which will meet annually, will be the vehicle for that process.

This is pretty unglamorous stuff. There was some good-natured mockery of the Prime Minister flying from the G20 meeting to meet a Great Hall full of local mayors. It wasn’t helped by ABC News apparently selecting the most misbegotten-looking of the lot on Tuesday night to declare what they wanted to spend money on. And there’s always the taint of corruption. Localism is the strength and weakness of local government, enabling it to tackle the real concerns of voters, but prey to venality and local networks of influence.

But improving the performance of local governments falls into the category of other items on the Rudd agenda like harmonising inter-state regulation, that will slowly accrue significant long-term benefits. The Productivity Commission looked at local government earlier this year, explaining how diverse local government is, how its role had changed massively in recent years as it moved into ever-greater levels of service provision, that they employ more than 160,000 people and manage assets worth $183b.

That’s a hell of a lot of depreciation to manage, for a start.

This is smart politics as much as smart policy. The ALGC, the seriousness with which the Commonwealth is treating local government, and the even spread of funding, will ensure Kevin Rudd’s name is spoken of with delight in council chambers across the country. The contrast with the Howard Government, which blatantly favoured Coalition electorates with regional funding and demanded everything it funded be badged with a Commonwealth logo, couldn’t be greater.

In contrast John Brumby came to Canberra yesterday looking like the Labor Premier from Central Casting.

There must be some genetic disorder peculiar to State Labor leaders that prevents them from realising no one could care less about their claims that somehow their individual states are being dudded by the allocation of funding. Brumby could have saved himself a flight to Canberra and bleated in Melbourne about how Victoria was missing out on its fair share of funding. He also appears to be under the illusion that the Commonwealth can simply print off more money to invest in Victorian infrastructure to replace revenue destroyed by the financial crisis.

But worse was to come than a parochial speech.

If The Age is correct this morning, Brumby is about to announce the first outright, old-fashioned protectionism of recent years.

Governments favouring local manufacturers is a classic non-tariff barrier. In fact it’s even worse than tariffs, which at least are quantitative and transparent. The proposal would also appear to breach the Australia-United States Free Trade Agreement, which specifically requires governments and their agencies in both countries to treat suppliers from the other country no differently to local ones, except in relation to cars.

And it was only a few days ago that we signed up to a G20 communiqué that said “within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services”.

While the Commonwealth is wasting more billions of dollars propping up the car industry, at least it will be accompanied by further reductions in tariffs and an attempt to spur innovation in the industry. In contrast, the Victorian proposal is a shortcut to dudding taxpayers. They should at least direct some funding to some product stickers that read “This expensive, lower-quality product is proudly made right here in Australia, not by some bloody foreigners.” Maybe Brumby should ask Victorian exporters if they’d like overseas governments to adopt the same idea.

In recent years, under Steve Bracks, Victoria was the leading source of quality policy thinking of any level of government. That honour has now passed to the Rudd Government. Victoria is recycling tired and demonstrably false economic myths.

Peter Fray

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