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«Chapter 2: Federalism, Regionalism and the Reshaping of Australian Governance A. J. Brown Introduction For at least a generation, Australia has been ...»

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Federalism and Regionalism in Australia Figure 2.4. Australia as 31 Provinces (Australian Labor Party, 1920) Source: Ellis (1933) In recent years, a greater ability to look beyond party-political stereotypes and short-term political gains has been identified as an important need in all debates on constitutional development (e.g. Saunders 2000). This need clearly applies to questions concerning the relationship between regionalism and federalism under the present Constitution.

A dynamic and changing system A fifth fact, as asserted at the outset of this chapter, is that the Australian federal system remains dynamic as we move forward into the 21st century, notwithstanding the gridlock affecting these past 19th and 20th century efforts to better accommodate regionalism within the national constitutional settlement.

Notwithstanding the lack of productive outcome from these debates, there has been enormous past and current change in the dynamics of Australian federalism, including with respect to regionalism. In almost every aspect, the federation we have today is vastly different from the federation of 1901 or 1910. The growth in federal influence and financial control has been phenomenal, particularly in the recent period of ‘pragmatic federalism’ (Hollander and Patapan 2007), also Federalism, Regionalism and the Reshaping of Australian Governance described as ‘regulatory federalism’ (Parkin and Anderson 2007) or, less generously, ‘opportunistic federalism’ (Twomey and Withers 2007). While some people decry this trend, in other respects it has been clearly advantageous to national social and economic development, and holds further potential for nationally-coordinated approaches to improved policy making, service delivery and institutional restructuring at all levels of the system. When it comes to the quest for a more effective, responsive and efficient system overall, three examples

will suffice:

• Intergovernmental collaboration: The way in which governments work together has changed enormously, and even if under pressure of centralisation, serious discussion is occurring around the need for more robust permanent systems of intergovernmental relations. For example, the Business Council of Australia (2006) and the Federal Labor party (McMullan

2007) are united in support for this path. As part of the movement to collaboration, we also see completely different relationships between existing governments. The idea that state governments were autonomous or sovereign within their sphere, and therefore intractably resistant to pressures for change from above or below, has largely gone away. State governments are now actively dealing other actors into what used to be their core business, and often actively dealing themselves out or reducing their role in particular areas of public policy. This is a very dynamic situation.

• Growth in the role and capacity of local government: Although local government remains structurally weak, it is on a growth path – much stronger, much more credible and better recognised by its citizens than 40 years ago (see Gray and Brown, Bell, this volume). In response to the intergovernmental cost-shifting affecting local government, consensus is growing that local government should be brought fully within the federal financial system, and receive a larger share of total public revenues in exchange for its growing role in many areas of policy and services. Local government is also again steeling for a campaign for federal constitutional recognition, despite referendum failures in 1974 and 1988. Whether or not this occurs, there is no reversing the trend towards local government taking on greater significance both for citizens, and for other levels of government, as the federal system as a whole continues to respond to the pressures of globalisation. Questions of how best to develop the capacity of local government to shoulder a greater burden, including its own structural reforms, have ceased to be purely state-level questions: they are also clearly national ones.

• Regional governance: The future of regional governance has become an unavoidable question for all existing levels of government, as they become progressively more collaborative and as the Commonwealth increasingly enters policy spheres that require action and implementation ‘on the ground’.

Federalism and Regionalism in Australia Most obviously, this has occurred in environmental and natural resource management, where robust and sustainable regional arrangements are now pivotal, if problematic, for the success of well-entrenched national initiatives (see Bellamy, this volume). Moreover, this need for more robust regional governance systems is set to expand under initiatives such as the Commonwealth’s proposed $10 billion Murray-Darling Basin water management plan. As set out through much of this book, however, the same needs exist in many policy areas for a review of how diverse new and old regional programs can best be constituted, rationalised, staffed and resourced into the medium-term. Concerns for whole-of-government cooperation in place management, community renewal and improved social service delivery raise the same questions. Even without any express ideology of ‘devolution’ to local and regional levels, the increasing reliance of all levels of government on regional bodies (including regionally-organised local bodies, and new regional configurations in traditional state administration) reveals an overall trend in this direction, however unplanned and messy the devolutionary trend may currently be.

Conclusions: five lessons for contemporary institutional design From these historical relationships between the federal system and Australian regionalism, we can draw five key lessons about future approaches to the development of Australia’s system of governance.

First, we must recognise that we have undervalued the idea of general-purpose government at local and regional levels, as an element of our national governance strategies. Whether we approach the quest for improved on-ground outcomes through the prism of collaborative federalism, or capacity-building in local government, or improved regional governance, we have to make active choices about whether – or how – we intend to strengthen local and/or regional governance as a sustainable constitutional player in the medium to long-term.

Devolution in federal and state responsibilities is unlikely to be effective, or enduring, without dealing with the issue of general-purpose government capacity at local and regional levels to carry the burden, in a manner that is democratically accountable. Regional institutions cannot be further developed without a constructive debate about their political legitimacy, including dealing with the political reality of existing local government. The opportunities for meaningful reform are limited unless the strengthening of local and regional governance is accompanied by a strengthening of local and regional democracy.

A second key lesson is that while the current reform environment holds positive opportunities for a new reconciliation of federalism and regionalism, it is not currently fashionable to build governance capacity by enlarging the size of the public sector, at any level. This is implicit in recent theories of ‘governance’ as Federalism, Regionalism and the Reshaping of Australian Governance approaches to societal decision-making in which governments steer, but no longer necessarily row; and in which a range of networked policy actors take responsibility for policy formulation and on-ground action – including privatised, contracting and not-for-profit organisations, as well as interest and community groups (see Weller 2000). Despite the appearance of being a large, cumbersome system, comparative analysis suggests that federalism can help deliver government that is relatively small (Twomey and Withers 2007). Just as importantly, these arguments accompany a period in which Australian governments have withdrawn from direct public investment in economic development, and tend to prefer to let the market decide, as demonstrated by Andrew Beer’s chapter. These trends raise important challenges for the task of strengthening local and regional capacity. Even if governance is now about partnerships, the facilities needed to develop and sustain effective partnerships are coming off an extremely low base. In short, if national and state governments intend to continue to put more back on to the community and onto business to ‘do it itself’, then without investment in some greater local-level governmental infrastructure to support this, the risks of policy failure are probably increasing rather than being reduced.

A third key lesson is the need for more productive debate about the problems and solutions inherent in the current federal system, both among experts and at a community level. As Gray and Brown (this volume) demonstrate, it is relatively easy to find evidence that citizens have problems with the existing system. It is more complex to identify the basis for differing views, and to reconcile these with historical experiences and institutional design principles in order to identify potential common ground for reform. There is every reason to be positive about the potential gains from reform of the federal system, to deliver more effective and responsive government both nationally and at the local and regional levels – and yet many of the arguments for reform continue to be presented negatively, as ‘whinges’ about the inadequacy of particular existing institutions. Painting federal governments as centralist, totalitarian or opportunistic ‘monsters’ does a disservice to many efforts of federal legislators and administrators to secure practical improvement in policy outcomes. It is similarly pointless to blame the State government of the day for ‘ignoring the regions’, as if today’s legislators and administrators should take moral responsibility for the complex history that has left most state government operating at such problematic scales. In the survey described in Gray and Brown (this volume), two-thirds of the NSW State government employees captured within the respondent group expressed a preference for a scenario consistent with abolition of State government. If state government employees are indeed as cognisant as this of the potential merits of change, it makes little sense to hold them culpable for their own current predicament. Similarly, at a larger level, it makes little sense for reform advocates to campaign for the abandonment of Federalism and Regionalism in Australia federalism in principle when, plainly, the opportunities for improvement in our system of governance relate less to whether the system is federal or unitary in nature, than how our federal experience has panned out in practice. There are strong reasons why federalism makes sense as a constitutional system for Australia, even if there are also strong reasons why that system should evolve, either incrementally or dramatically.

Fourth, the key to a more productive debate may lie in the better alignment of thinking about short, medium and long-term approaches to reform. The last 20 years, in particular, have seen reform options approached competitively – in other words, if a short-term solution or ‘quick fix’ is presented, it tends to be grabbed as an alternative to investigating longer-term reform, and the potential gains from longer-term reform consequently dismissed altogether. This has tended to be true even when it makes sense to consider both, or to at least make short-term decisions in the context of an identified longer-term direction. Equally, the experience with collaborative federalism in the 1990s tends to indicate that even when something works, we are slow to consider mechanisms to institutionalise or constitutionalise the advance. Even when dramatic, the coercive use of federal legislative powers to reshape federalism, such as in the WorkChoices decision, may open up as many questions as it answers about the medium and long-term evolution of the system – after all, contrary to the government advertising that preceded it, the massive expansion of the Commonwealth industrial relations system nevertheless still leaves state industrial tribunals in place.

Similar considerations apply when considering the future of local and regional governance within the federal system. Despite being pursued as alternatives to long-term reform, the challenges encountered by many short-term initiatives simply increase the case for better thought-out, sustainable institutional investment. The more federal and state governments collaborate on the design and delivery of programs, the greater their need to also agree on how communities are to be engaged in the design, and how the delivery will be achieved, measured and monitored at the local level. Without agreement on this local-level engagement and delivery, all the political triggers remain for the collaboration to fail – for example, for dissatisfied regional communities to again take their issues directly to the federal level, and campaign for alternative programs or new interventions to correct poor implementation by state governments. This dynamic, as much as any fixation with power for power’s sake, appears to explain much of the growth of federal intervention in many local and regional issues.

To break this cycle, short-term program objectives and longer-term institutional development need to be pursued hand-in-hand. In other words, wherever it is acknowledged that design or delivery of programs will rely on action at lower local or regional levels, then initiatives in whole-of-government collaboration need to be supported by whole-of-government commitment to optimal devolution Federalism, Regionalism and the Reshaping of Australian Governance of responsibility to that level – even if this means substantial development in the capacity and direct accountability of regional frameworks. Without it, assuming the program is substantially delivered, there is little to prevent the inevitable conflicts over outcomes and performance from reinfecting federal-state relations, and jeopardising further collaboration.

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