Mar 14, 2014

Wall-to-wall blue gives Abbott the chance of real COAG reform

Tomorrow's Tasmanian and South Australian elections represent a huge opportunity for Tony Abbott to drive real reform via COAG. But Kevin Rudd had a similar opportunity and wasn't able to exploit it.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

There's one certainty about the impact of political alignments on Commonwealth-state relations: having a Prime Minister of one political persuasion and state and territory leaders all of the other is a recipe for complete dysfunction. The Council of Australian Governments process virtually ground to a halt in the last Howard government term because co-operation was impossible between John Howard, especially as he became more and more concerned about the threat of Kevin Rudd, and Labor leaders desperate to ensure a Labor win. It was assumed at the time that the Rudd ascension would usher in an unprecedented period of Commonwealth-state co-operation. Similar assumptions are being made now in anticipation of Liberal victories in Tasmania and South Australia tomorrow (although the Liberals haven't won outright in South Australia since 1993, so wait until Jay Weatherill concedes before adding it to the blue map). They would leave just the ACT's Katy Gallagher as the lone Labor representative and, while we shouldn't forget then-chief minister Jon Stanhope's gutsy stand on national security laws in 2005, that is almost as good as a political bluewash. But in reality, Rudd found it difficult reaching consensus with his state colleagues, and he resorted to buying off their agreement to even relatively minor reforms, back when he had the fiscal flexibility to do so. And reforms that were agreed in areas such as regulatory harmonisation ended up being piecemeal, as states dragged their heels on necessary reforms after the event. A COAG Reform Council review at the end of 2012 showed that nearly half of COAG's agreed regulatory reforms, including some agreed by Julia Gillard and the states, were delayed or simply hadn't been done -- something those who think a blue political map will usher in a new era of deregulation ought to consider. It's thus possible that Prime Minister Tony Abbott might oversee exactly the kind of COAG cycle that Rudd did -- starting off with a COAG entirely composed of like-minded leaders but failing to overcome parochialism and heel-dragging to achieve anything major, until Liberal leaders start getting replaced with Labor leaders again (potentially in Victoria at the end of the year) and the system resets to its dysfunctional norm. This has implications for potentially the most exciting, indeed revolutionary, addition to the COAG agenda under Abbott -- a serious effort to resolve bureaucratic duplication between states and the Commonwealth. Ending duplication is a great idea but is more complicated than simply cleaning out the Department of Health at Woden in Canberra and letting the states run the health system. It has implications for funding, which is complicated enough given financially fragile states won't want to have more functions to perform without the money to fund them, and for responsibility for politically sensitive services. Achieving genuine reform in how education and health, in particular, are overseen and how policy is delivered in the mixed funding environment of a federation will be a huge challenge even with every COAG leader wearing a blue tie. Hopefully Abbott will be more aggressive than Rudd, who seemed unwilling to use the full power of the prime ministership until John Brumby began placing serious obstacles in the way of his proposed health reforms in 2010. As national leader, Abbott has the responsibility and the right to demand the subordination of state interests to the national interest. He's also previously indicated, via his thinking on federalism in his book Battlelines, a willingness to contemplate ways of overriding states that refuse to co-operate with the Commonwealth. Abbott could, potentially, exploit his COAG opportunity in a way Rudd was unable to. That's likely the only way we'll avoid a repeat of the Rudd years.

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10 thoughts on “Wall-to-wall blue gives Abbott the chance of real COAG reform

  1. Gavin Moodie

    Recall the panic the Australian tried to stoke when there was wall to wall Labor? It was all about the absence of checks and balance, and the likely abuse of power. Of course this time it is all about the opportunity for substantial ‘reform’,

  2. Kate

    Your article assumes that the states will have it wrong on local issues and that Abbott will have it right. I beg to differ. John Brumby pushed back against the health reforms because of the different model of health service delivery in Victoria, which had a system of locally based community health services that no longer existed in other states, as well as regional arrangements for collaboration and coordination through primary care partnerships. Medicare Locals have essentially duplicated this regional system. It should have been strengthened rather than effectively displaced. Nationally driven policies often take little account of local community needs and diversity: imposing one size fits all models is not effective nor necessarily ‘efficient’. Personally I am terrified of what an ideologically driven Abbott Government may inflict on us all through COAG: a massive neoliberal experiment in reshaping the Australian economy and communities. Not in my name.

  3. Peter Evans

    The old “ending duplication” line. Those duplicate (not quite duplicate) bureaucracies exist to exert control, over money and the political implications of policy delivery. So to think that duplication can be ended is to think that the feds would be willing to cede control and any political benefits that go with delivery to the states. Not gonna happen.

  4. JMNO

    Abbott will certainly be more aggressive than Rudd. He is more aggressive than just about any other politician. The question is what will he ‘reform’? And in whose interests? Will it be along the lines of the handing back of environmental decision-making to states, akin to putting the fox in charge of the chicken farm?

  5. AR

    BK – when did you arrive from Planet Zog? Do you not understand why absolute power is anathema to anyone/thing of more than double digit IQ?
    whooaa what’s with the italicised format, even of the comment header?

  6. Interrobanging On

    I have defended the ‘BK loves TA’ thing as bit of an aberration amongst good analysis, but now I am wondering. It is a bit much.

    “Real reform”?

    Can anyone serious believe there will be good governance attempted?

    Maybe some scams like ‘cutting green tape’ by giving all approval to the States because the Abbott government has been bought by the mining industry?

    Perhaps some jiggery pokery to advantage the Liberal Party?

    But what about GST allocation. Will the problem of Abbott agreeing with WA that they have been ripped off, but also agreeing that Tas needs extra support, depending what state he is in, bite him back.

    And he was heavily criticised by NSW in particular on education during the ‘unity ticket’ backflips.

    Plus he will likely just look for any battle, because fighting is all he knows.

  7. Dogs breakfast

    OK, reality check. Firstly, just because they appear to be from the same side doesn’t mean they will co-operate. The coalition is even less likely to be agreeable, and sometimes with good reason. It will be akin to herding cats, as it always is at COAG.

    Secondly, Abbott doesn’t have an agenda, let alone a reform agenda. You need policies and an idea of what you are doing and where you are going. Abbott has displayed none of that to date, where is he going to find it. Remember the great reformer John Howard who slipped through one reform in 11 years. Why would Abbott be more active than him.

    Finally, see Peter Abbott’s comment. There isn’t much duplication in health, just endless layers of control. If Abbott was fair dinkum, lived up his team’s mindles ideology, and actually had some political courage, he could basically disband the entire Federal Health Dept (6000 odd employees I read) and just hand over large grants to the States and let them have it, both the money and the responsibility.

    If he did that, he would have achieved a great reform.

    Do you really think it will happen?

  8. AR

    STOP the ITALICS!!! This from a friend in the Merkin Isle –
    Apparently nick mckim tried to place an ad in the Advocate for paul ohalleron. They refused saying they had no room.
    Then a while later they called him back. Said palmer had booked a four page lift out at $12000. Then when they saw the content the paper refused to run it as it was libellous etc. then offered four page lift out to the greens for half price so a nice big spread for paul. Palmer has so much money he thinks he is invincible. He swore a lot at the paper person as well. You just have to laugh. Or cry.

  9. R. Ambrose Raven

    Commonwealth-State Financial Relations has been in need of its own summit for a decade. Rather than promoting good government and enabling change, it is often a barrier to good performance due to the strong financial position of the Commonwealth as funder versus the limited and dependent financial position of the states as provider.

    For example, the federal 2012/13 budget did not provide for any growth in funding to the states, despite stagnant GST revenue (Johnny forgot to mention that the GST was a growth-sensitive tax). Increasingly, states have responsibilities they cannot afford.

    Vertical fiscal imbalance has created increasingly obvious and increasingly severe problems in the truly important areas of government such as health and education. Instead of each tier exercising the powers most appropriate to it, governments are prone to administrative duplication and buck-passing.

    A spectacular example is the appalling spectacle of “Education” Minister Christopher Pyne seeking to destroy the government school system not just by giving all Commonwealth money to rent-seeking private schools, but also by absolving the States of any Commonwealth requirement to fund State schools.

    It is increasingly the reverse of “dual” federalism, in which states have specific policy areas, with the revenue to fund them. Naturally that would mean the States sharing the Commonwealth revenue base. Another option – broadening or increasing the GST – would increase rather than reallocate existing taxes, but is popular with the filthy rich because it effectively transfers tax-raising onto the less rich.

    GST is distributed according to the policy of “equalisation” whereby most of the GST is intentionally sent to the States that are poorest, requiring that some states are “subsidised” by others (usually NSW and Victoria) in an attempt to allow all states equivalent capacity to deliver services. It is inherently controversial as well as being complex. Even the Commonwealth Grants Commission admits there are flaws in the system. Distortions have the potential to exacerbate regional downturns and damage the national economy.

    Considering that the GST is a regressive tax, it is poetic justice that it is causing regressive behaviour by State politicians.

  10. Bill Parker


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