On Saturday evening, Tony Abbott delivered the Sir Henry Parkes Oration in Tenterfield, kicking off what will be a growing debate about the nature and mechanism of Australian federalism between now and the next election.

The Prime Minister’s speech reflected the thoughtful and honest views of a politician who, as health minister in the Howard government, experienced first-hand the complexities of federalism in one of the most important areas of public policy. Indeed, his speech was partly about his own personal intellectual journey from a “philosophical federalist into a pragmatic nationalist”, and beyond; since becoming leader of his party, Abbott has abandoned the proposal he put forward in his 2009 book Battlelines for a constitutional amendment giving the Commonwealth an automatic capacity to override state legislation.

Instead, Abbott now offers a more realistic program: a green paper and white paper process to kick off the debate, with the goal of achieving some form of both Commonwealth-state and bipartisan consensus on reform before the next federal election.

Needless to say, the issue of money looms large in such a debate, and by refusing to “play the rule-in, rule-out game”, Abbott necessarily has set GST hares running yet again — and not just about the rate of the GST, but about its distribution.

As we saw during the election campaign last year, when Labor effectively exploited Abbott’s willingness to consider GST reform, this is politically risky. But it is a risk well worth taking. Australian treasuries, state and federal, face revenue challenges for the foreseeable future. As the Prime Minister says, our federation is “not entirely or even substantially dysfunctional”, but establishing a more effective and efficient system of revenue-gathering, revenue-sharing and expenditure is necessary to enable governments to meet the coming fiscal challenge of an ageing population and long-term structural deficits.

Many have tried to initiate debates about federalism previously, and failed. Perhaps this push will as well, but the Prime Minister has given it an excellent start that should be acknowledged by other governments, politicians and parties.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey